SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14 (a) of the
Securities Exchange Act of 1934
(Amendment No. 1)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission Only (as permitted
by Rule 14a-6(e) (2)
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
Peoples Bancorp Inc.
________________________________________________
(Name of registrant as Specified in its Charter)
_____________________________________________________________________
(Name of Person Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which
transaction applies:
________________________________________________________
(2) Aggregate number of securities to which transaction
applies:
________________________________________________________
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11
(Set forth the amount on which the filing fee is
calculated and state how it was determined):
________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________
(5) Total fee paid:
________________________________________________________
[ ] Fee paid previously with the preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid: ________________________________
(2) Form, Schedule or Registration Statement No.: __________
(3) Filing Party: __________________________________________
(4) Date Filed: ____________________________________________
PEOPLES BANCORP INC.
POST OFFICE BOX 738
MARIETTA, OHIO 45750
(740) 374 -6136
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------------------------------
PEOPLES BANCORP INC.
-------------------
Marietta, Ohio
March 6, 1998
To the Shareholders of Peoples Bancorp Inc.:
You are cordially invited to attend the Annual Meeting of
Shareholders (the "Annual Meeting") of Peoples Bancorp Inc. (the
"Company") to be held at 11:00 A.M., local time, on Thursday,
April 9, 1998, in the Conference Room of The Peoples Banking and
Trust Company, 138 Putnam Street, Marietta, Ohio, for the
following purposes:
1. To elect the following Directors for terms of three years each:
Nominee Term Expires In
------- ---------------
Robert E. Evans (for re-election) 2001
Paul T. Theisen (for re-election) 2001
Thomas C. Vadakin (for re-election) 2001
2. To approve the Peoples Bancorp Inc. 1998 Stock Option Plan.
3. To approve the Peoples Bancorp Inc. Deferred Compensation Plan
for Directors of Peoples Bancorp Inc. and Subsidiaries.
4. To transact such other business as may properly come before the
Annual Meeting and any adjournment(s) thereof.
Shareholders of record at the close of business on February 10,
1998, will be entitled to notice of and to vote at the Annual
Meeting and any adjournment(s) thereof.
You are cordially invited to attend the Annual Meeting. The
vote of each shareholder is important, whatever the number of
common shares held. Whether or not you plan to attend the
Annual Meeting, please sign, date and return your Proxy promptly
in the enclosed envelope.
The Company's Annual Report to Shareholders for the fiscal year
ended December 31, 1997, accompanies this Notice and Proxy
Statement.
By Order of the Board of Directors,
/S/ RUTH I. OTTO
Ruth I. Otto
Corporate Secretary
PEOPLES BANCORP INC.
138 Putnam Street
Marietta, Ohio 45750
(740) 374-6136
PROXY STATEMENT
---------------
This Proxy Statement and the accompanying proxy are being
mailed to shareholders of Peoples Bancorp Inc., an Ohio
corporation (the "Company"), on or about March 6, 1998, in
connection with the solicitation of proxies by the Board of
Directors of the Company for use at the Annual Meeting of
Shareholders of the Company (the "Annual Meeting") called to be
held on Thursday, April 9, 1998, or at any adjournment(s)
thereof. The Annual Meeting will be held at 11:00 A.M., local
time, in the Conference Room of The Peoples Banking and Trust
Company, 138 Putnam Street, Marietta, Ohio.
The Company has four wholly-owned subsidiaries. They include
Gateway Bancorp, Inc. ("Gateway"), The Peoples Banking and Trust
Company ("Peoples Bank"), The First National Bank of
Southeastern Ohio ("First National") and The Northwest Territory
Life Insurance Company ("Northwest Territory").
A proxy for use at the Annual Meeting accompanies this Proxy
Statement and is solicited by the Board of Directors of the
Company. Shareholders of the Company may use their proxies if
they are unable to attend the Annual Meeting in person or wish
to have their common shares of the Company voted by proxy even
if they do attend the Annual Meeting. Without affecting any
vote previously taken, any shareholder executing a proxy may
revoke it at any time before it is voted by filing with the
Secretary of the Company, at the address of the Company set
forth on the cover page of this Proxy Statement, written notice
of such revocation; by executing a later-dated proxy which is
received by the Company prior to the Annual Meeting; or by
attending the Annual Meeting and giving notice of such
revocation in person. Attendance at the Annual Meeting will
not, in and of itself, constitute revocation of a proxy.
Only shareholders of the Company of record at the close of
business on February 10, 1998 (the "Record Date"), are entitled
to receive notice of and to vote at the Annual Meeting and any
adjournment(s) thereof. At the close of business on the Record
Date, 3,843,862 common shares were outstanding and entitled to
vote. Each common share entitles the holder thereof to one vote
on each matter to be submitted to shareholders at the Annual
Meeting. A quorum for the Annual Meeting is a majority of the
common shares outstanding. There is no cumulative voting with
respect to the election of directors.
Under the rules of the Securities and Exchange Commission (the
"SEC"), boxes are provided on the form of proxy for shareholders
to mark if they wish either to abstain on a proposal presented
for shareholder approval or to withhold authority to vote for
one or more nominees for election as a director of the Company.
Common shares as to which the authority vote is withheld will be
counted for quorum purposes; however, the effect of an
abstention on the proposal to approve the Peoples Bancorp Inc.
1998 Stock Option Plan and to approve the Peoples Bancorp Inc.
Deferred Compensation Plan for Directors is the same as a "no"
vote.
Broker/dealers, who hold their customers' common shares in
street name, may, under the applicable rules of the
self-regulatory organizations of which the broker/dealers are
members, submit and sign proxies for such common shares and may
vote such common shares on routine matters, which, under such
rules, typically include the election of directors, but
broker/dealers may not vote such common shares on other matters,
which typically include the approval of compensation plans,
without specific instructions from the customer who owns such
common shares. Proxies signed and submitted by broker/dealers
which have not been voted on certain matters as described in the
previous sentence are referred to as broker non-votes. Such
proxies count toward the establishment of a quorum. Broker
non-votes on the proposal to approve the Peoples Bancorp Inc.
1998 Stock Option Plan and to approve the Peoples Bancorp Inc.
Deferred Compensation Plan for Directors will not be considered
as votes entitled to be cast in determining the outcome of that
proposal.
As of the date of this Proxy Statement, the Board of Directors
of the Company does not know of any business to be brought
before the Annual Meeting except as set forth in this Proxy
Statement. However, if any matters other than those referred to
in this Proxy Statement should properly come before such Annual
Meeting, or any adjournment(s) thereof, it is intended that the
persons named as proxies in the enclosed proxy may vote the
common shares represented by said proxy on such matters in
accordance with their best judgment in light of the conditions
then prevailing.
The Company will bear the costs of preparing and mailing this
Proxy Statement, the accompanying proxy and any other related
materials and all other costs incurred in connection with the
solicitation of proxies on behalf of the Board of Directors.
Proxies will be solicited by mail and may be further solicited,
for no additional compensation, by officers, directors, or
employees of the Company and its subsidiaries by further
mailing, by telephone, or by personal contact. The Company will
also pay the standard charges and expenses of brokerage houses,
voting trustees, banks, associations and other custodians,
nominees, and fiduciaries, who are record holders of common
shares not beneficially owned by them, for forwarding such
materials to and obtaining proxies from the beneficial owners of
common shares entitled to vote at the Annual Meeting.
The Annual Report to the Shareholders of the Company for the
fiscal year ended December 31, 1997 (the "1997 fiscal year") is
enclosed herewith.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------
The following table sets forth, as of the Record Date, certain
information concerning the beneficial ownership of common shares
by the only person known to the Company to be the beneficial
owner of more than 5% of the outstanding common shares:
Name and Address Amount and Nature of Percent of
of Beneficial Owner Beneficial Ownership Class (1)
- ------------------- -------------------- ----------
Peoples Bank - Trustee 690,835(2) 18.0%
138 Putnam Street
Marietta, Ohio 45750
(1) The percent of class is based on 3,843,862 common shares
outstanding on the Record Date.
(2) Includes 53,822 common shares, 289,840 common shares, 182,135
common shares and 34,248 common shares as to which the
Investment and Trust Department of Peoples Bank has shared
investment and sole voting power, shared investment and voting
power, sole voting and investment power, and sole investment and
shared voting power, respectively. The officers and directors
of Peoples Bank and the Company disclaim beneficial ownership of
these common shares by reason of their positions. Does not
include 130,790 common shares held by the Investment and Trust
Department in its capacity as Trustee under the Peoples Bancorp
Inc. Retirement Savings Plan with respect to which the
Investment and Trust Department has neither voting nor
investment power.
The following table sets forth, as of the Record Date, certain
information with respect to the common shares beneficially owned
by each director of the Company, by each nominee for election as
a director of the Company, by the executive officer of the
Company named in the Summary Compensation Table and by all
executive officers and directors of the Company as a group:
Amount and Nature of Beneficial Ownership (1)
---------------------------------------------
Common Shares
Which Can
Common Be Acquired Upon
Shares Exercise of Options Percent
Presently Exercisable of
Name Held Within 60 Days Total Class (2)
- --------------------- --------- ------------------- ----- ---------
George W. Broughton 51,080 ( 4) 4,272 55,352 1.3%
Wilford D. Dimit 10,468 ( 5) 4,381 14,849 (3)
Robert E. Evans (6) 63,445 ( 7) 13,310 76,755 2.0%
Barton S. Holl 6,614 ( 8) 2,772 9,386 (3)
Rex E. Maiden 4,185 521 4,706 (3)
Norman J. Murray 4,507 ( 9) 4,744 9,251 (3)
Paul T. Theisen 9,813 (10) 4,744 14,557 (3)
Thomas C. Vadakin 1,855 (11) 4,744 6,599 (3)
Joseph H. Wesel 27,592 (12) 4,744 32,336 (3)
All directors and
executive officers
as a group
(numbering 14) 97,729 (13) 69,350 267,079 6.9%
(1) Unless otherwise noted, the beneficial owner has sole voting
and investment power with respect to all of the common shares
reflected in the table. All fractional common shares have been
rounded to the nearest whole common share.
(2) The percent of class is based upon 3,843,862 common shares
outstanding on the Record Date and the number of common shares,
if any, as to which the named person has the right to acquire
beneficial ownership upon the exercise of options exercisable
within 60 days of the Record Date.
(3) Reflects ownership of less than 1% of the outstanding common shares.
(4) Includes 3,053 common shares held by Mr. Broughton as
custodian for his children, as to which Mr. Broughton has sole
voting and investment power and claims beneficial ownership.
Does not include 7,085 common shares held of record and
beneficially owned by Mr. Broughton's wife, as to which he has
no voting or investment power and disclaims beneficial
ownership. Also does not include 9,821 common shares held in
the George Broughton's Children's Trust, an irrevocable trust
with Peoples Bank as Trustee. Peoples Bank exercises sole
voting and investment power with respect to the common shares
held in the George Broughton's Children's Trust and these common
shares are included among the common shares shown as
beneficially owned by Peoples Bank in the preceding table. Does
not include 10,981 common shares held of record by the Broughton
Foods Company Pension Trust B, as to which Mr. Broughton has no
voting or investment power and disclaims beneficial ownership.
Does not include 121 shares held in the Peoples Bank Rabbi Trust
in the name of George W. Broughton. Peoples Bank has sole voting
and investing powers in this Trust.
(5) Includes 6,301 common shares held jointly by Mr. Dimit with his
wife as to which he exercises shared voting and investment power.
Does not include 726 shares held in the Peoples Bank Rabbi Trust
in the name of Wilford D. Dimit. Peoples Bank has sole voting
and investing powers in this Trust.
(6) Executive officer of the Company named in the Summary
Compensation Table.
(7) Includes 12,556 common shares allocated to the account
of Mr. Evans in the Peoples Bancorp Inc. Retirement Savings Plan
with respect to which Mr. Evans has the power to direct the
voting and disposition. Does not include 8,573 common shares
held of record and owned beneficially by Mr. Evans' wife, as to
which common shares Mr. Evans has no voting or investment power
and disclaims beneficial ownership. Does not include 849 shares
held in the Peoples Bank Rabbi Trust in the name of Robert E.
Evans. Peoples Bank has sole voting and investing powers in
this Trust.
(8) Includes 2,869 common shares held jointly by Mr. Holl and his
wife as to which he exercises shared voting and
investment power.
(9) Does not include 9,016 common shares held of record and
beneficially owned by Mr. Murray's wife, as to which
he has no voting or investment power and disclaims beneficial
ownership thereof. Includes 1,936 shares in the Susan Murray
Trust Investment Account in which Mr. Murray shares voting
power.
(10) Does not include 606 common shares in the Peoples
Bank Rabbi Trust in the name of Paul T. Theisen. Peoples Bank
has sole voting and investing powers in this Trust.
(11) Includes 1,270 shares in the Thomas C. Vadakin Investment Account in
Peoples Bank in which Mr. Vadakin shares investment and voting power.
(12) Does not include 5,690 common shares held of record and beneficially
owned by Mr. Wesel's wife as to which he has no
voting or investment power and disclaims beneficial ownership.
Does not include 849 common shares in the Peoples Bank Rabbi
Trust in the name of Joseph H. Wesel. Peoples Bank has sole
voting and investment powers in this Trust. Also does not
include 13,669 common shares in the Joseph and Lu Wesel
Grandchildren's Trust in which the Peoples Bank has sole
investment and voting powers. Does not include 12,447 common
shares held of record by the Marietta Ignition, Inc. Pension
Plan as to which Mr. Wesel has no voting or investment power and
disclaims beneficial ownership. Mr. Wesel serves as a member of
the Administrative Committee for Marietta Ignition, Inc. Pension
Plan. Peoples Bank shares voting power with respect to the
common shares held in the Marietta Ignition, Inc. Pension Plan
with the Plan Administrator and said common shares are included
among the common shares shown as beneficially owned by Peoples
Bank in the preceding table.
(13) Includes common shares held jointly by directors and
officers and other persons. Also includes 12,822 common shares
allocated to the respective accounts of executive officers of
the company in the Peoples Bancorp Inc. Retirement Savings Plan.
See notes (4), (5), (7) and (8) through 12) above.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORT COMPLIANCE
----------------------------------------------------
To the Company's knowledge, based solely on a review of the
copies of the reports furnished to the Company and written
representations that no other reports were required, during the
1997 fiscal year, all filing requirements applicable to
officers, directors and greater than 10% beneficial owners of
the Company under Section 16(a) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), were complied with;
except that:
1) On December 5, 1997, Mr. Wesel filed a Form 4 to report
transactions for the month of November, 1997. However, a
transaction for the purchase of 200 common shares was omitted
inadvertently from the report. The error was later discovered
and a Form 4 was filed reporting the transaction on December 15,
1997.
2) In February, 1996, Mr. Holl filed a Form 5 for the year
ended December 31, 1995. The information was recorded
incorrectly by the Company as a Form 4 filing for the January
exercise of stock options in the total amount of 1,973 common
shares. Mr. Holl's internal file was coded "Current", and no
Form 4 was produced for the transaction. This erroneous status
remained intact until an unrelated transaction occurred, and a
Form 5 for the year ended December 31, 1997 was generated which
included the subject transaction, correcting the prior filing.
ELECTION OF DIRECTORS
---------------------
(Item 1 on Proxy)
In accordance with Section 2.02 of the Regulations of the
Company, three directors of Class III are to be elected to hold
office for terms of three years each, in each case until their
respective successors are duly elected and qualified. It is the
intention of the persons named in the accompanying proxy to vote
the common shares represented by the proxies received pursuant
to this solicitation for the nominees named below who have been
designated by the Board of Directors, unless otherwise
instructed on the proxy.
The following table gives certain information concerning each
nominee for election as a director of the Company. Unless
otherwise indicated, each person has held his principal
occupation for more than five years.
Position(s) Held Nominee
With the Company For
and its Subsidiaries Director Term
and Principal Continuously Expiring
Nominee Age Occupation(s) Since In
- ---------------- --- -------------------- ------------ --------
Robert E. Evans 57 President and Chief 1980 2001
Executive Officer of
the Company and of
Peoples Bank; Chairman
of the Board of
Northwest Territory
and Gateway Bancorp, Inc.
Paul T. Theisen 67 Of counsel with firm of 1980 2001
Theisen, Brock, Frye, Erb
& Leeper Co., L.P.A.
Attorneys at Law,
Marietta, Ohio.
Thomas C. Vadakin 66 Retired from Vadakin, 1989 2001
Inc., December 31, 1997;
Director, The Airolite
Company, Marietta, Ohio, a
manufacturer of ventilating
louvers. 100% Owner of
Conclude,Inc, an Ohio
Corporation, as of now a
dormant corporation.
(1) Mr. Evans is also a director of Peoples Bank, First
National, Northwest Territory Life Insurance Company and
Gateway Bancorp.
(2) Mr. Theisen is also a director of Peoples Bank and First
National.
(3) Mr. Vadakin is also a director of Peoples Bank.
While it is contemplated that all nominees will stand for
election, if one or more nominees at the time of the Annual
Meeting should be unavailable or unable to serve as a candidate
for election as a director, the proxies reserve full discretion
to vote the common shares represented by the proxies for the
election of the remaining nominees and for the election of any
substitute nominee or nominees designated by the Board of
Directors. The Board of Directors knows of no reason why any of
the above-mentioned persons will be unavailable or unable to
serve if elected to the Board.
The Regulations of the Company provide that Shareholder
nominations for election to the Board of Directors must be made
in writing and must be delivered or mailed to the Secretary of
the Company not less than 14 days nor more than 50 days prior to
any meeting of shareholders called for the election of
directors; provided, however, that if less than 21 days' notice
of the meeting is given to the shareholders, such nomination
must be mailed or delivered to the Secretary not later than the
close of business on the seventh day following the day on which
the notice of the meeting was mailed. Such notification must
contain the following information to the extent known by the
notifying shareholder: (a) the name, age, business address and
residence address of each proposed nominee; (b) the principal
occupation or employment o each proposed nominee; (c) the number
of common shares beneficially owned by each proposed nominee and
by the notifying shareholder; and (d) any other information
required to be disclosed with respect to a nominee for election
as a director under the proxy rules promulgated under the
Exchange Act. Each such notification must be accompanied by he
written consent of the proposed nominee to serve as a director
of the Company if elected. Nominations which the Chairman of
the Annual Meeting determines are not made in accordance with
the Regulations of the Company will be disregarded.
Under Ohio law and the Company's Regulations, the three
nominees for election as Class III directors receiving the
greatest number of votes will be elected as directors.
The following table gives certain information concerning the
current directors who will continue to serve after the Annual
Meeting. Unless otherwise indicated, each person has held his
or her principal occupation for more than five years.
Position (s) Held
and Principal Continuously Expires
Name Age Occupation(s) Since In
- -------------------- ---- --------------------- ------------ -------
George W. Broughton 40 Director and Executive 1994 2000
Vice President/Sales
and Marketing, Broughton
Foods Co., a processor
and distributor of dairy
products; Director of
SBR, Inc., maker of
replacement windows and
owner of "Wood Crafters"
catalog and stores. (1)
Wilford D. Dimit 63 President of First 1993 2000
Settlement, Inc.,
Marietta, Ohio, a retail
clothing store, shoe store
and restaurant. (1)
Barton S. Holl 75 Chairman of the Board of 1990 2000
Logan Clay Products, Inc.,
Logan, Ohio, a manufacturer
of clay products.
Rex E. Maiden 62 Chairman of the Board of 1996 1999
Maiden & Jenkins
Construction Co.,
Nelsonville, OH, a highway
and bridge contractor and
a contractor of commercial,
industrial and educational
buildings; Treasurer and
Director of Sunday Creek
Coal Co., Nelsonville, OH,
a holding company for land
and minerals such as coal
and oil; President and
Chairman of the Board of
Nelsonville Consulting
and Construction Co.,
Nelsonville, OH, a
consulting firm which does
design work for several
construction companies;
Chairman of the Board of
Black Top Contracting,
Nelsonville, OH, a paving
contractor. (1)
Norman J. Murray 80 Former President and 1980 1999
Chairman of the Board of
The Airolite Co., Marietta,
Ohio, a manufacturer of
ventilating louvers, retired
in 1994; Chairman of the
Board of Peoples Bank
since 1990. (1)
Joseph H. Wesel 68 Chairman and Chief 1980 1999
Executive Officer of
Marietta Automotive
Warehouse, Inc., Marietta,
Ohio, an automotive parts
wholesaler; President of
Auto Paints Works Inc.,
Marietta, Ohio, a wholesaler/
retailer of auto paint and
body shop supplies; President
of W.D.A., Inc., Marietta,
Ohio, a real estate holding
company; Director, Marietta
Ignition, Inc., a wholesaler/
retailer of automotive parts
and industrial supplies;
Chairman of the Board of the
Company since 1991. (1)
_____________
(1) Also a director of Peoples Bank.
There is a family relationship between Directors, Thomas C.
Vadakin and Paul T. Theisen (brothers-in-law). There is no
other family relationship between any executive officer, or
person nominated or chosen to become a director or executive
officer of the Company.
The Board of Directors of the Company held a total of thirteen
(13) meetings during the Company's 1997 fiscal year. Each
incumbent director attended 75% or more of the aggregate of the
total number of meetings held by the Board of Directors during
the period he served as a director and the total number of
meetings held by all committees of the Board of Directors on
which he served during the period he served.
The Board of Directors of the Company has an Audit Committee
comprised of George W. Broughton, Wilford D. Dimit, Barton S.
Holl, Norman J. Murray, and Joseph H. Wesel (Mr. Wesel serves
as an ex-officio member). The function of the Audit Committee
is to assist the Audit Department of the Company in the annual
review of the loan portfolio of each subsidiary bank, to review
the work schedule of the Audit Department as to when audits of
the subsidiaries are to be conducted and the adequacy of such
audits, to review the adequacy of the Company's system of
internal controls, to investigate the scope and adequacy of the
work of the Company's independent auditors, and to recommend to
the Board of Directors a firm of accountants to serve as the
Company's independent auditors. The Audit Committee met four
(4) times during the Company's 1997 fiscal year.
The Board of Directors of the Company has a Compensation
Committee comprised of Rex E. Maiden, Norman J. Murray, Thomas
C. Vadakin and Joseph H. Wesel. The function of the
Compensation Committee is to review and recommend for approval
by the Board of Directors salaries, bonuses, employment
agreements and employee benefit plans for officers and
employees, to supervise the operation of the Company's
compensation plans, including its Stock Option Plans, to select
those eligible employees who may participate in each plan (where
selection is required) and to prescribe (where permitted under
the terms of the plan) the terms of any stock options granted
under any stock option plan of the Company. The Compensation
Committee met three (3) times during the Company's 1997 fiscal
year.
The Board of Directors does not have a standing nominating
committee or committee performing similar functions.
TRANSACTIONS INVOLVING MANAGEMENT
----------------------------------
Paul T. Theisen is of counsel in the law firm of Theisen,
Brock, Frye, Erb & Leeper Co., L.P.A. which rendered legal
services to the Company and its subsidiaries during the
Company's 1997 fiscal year and is expected to render legal
services to the Company and its subsidiaries during the
Company's 1998 fiscal year.
During the Company's 1997 fiscal year, its subsidiaries,
Peoples Bank, Gateway and First National, entered into banking
transactions, in the ordinary course of their respective
businesses, with certain executive officers and directors of the
Company, with members of their immediate families and with
corporations for which directors of the Company serve as
executive officers. It is expected that similar banking
transactions will be entered into in the future. Loans to such
persons have been made on substantially the same terms,
including the interest rate charged and the collateral required,
as those prevailing at the time for comparable transactions with
persons not affiliated with the Company or its subsidiaries.
These loans have been subject to, and are presently subject to,
no more than a normal risk of uncollectibility and present no
other unfavorable features. The aggregate amount of loans to
directors and executive officers of the Company and their
associates as a group at December 31, 1997, was $2,864,419.
This does not include the aggregate amount of $12,868,523, in
loans to persons acting in the sole capacity as directors or
executive officers of subsidiaries of the Company. As of the
date hereof, all of such loans are performing loans.
REPORT OF THE COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
------------------------------------------------
Notwithstanding anything to the contrary set forth in any of
the Company's previous filings under the Securities Act of 1933,
as amended, or the Exchange Act that might incorporate future
filings, including this Proxy Statement, in whole or in part,
this Report and the graph set forth on page 15 shall not be
incorporated by reference into any such filings.
The members of the Compensation Committee (the "Committee") are
Rex E. Maiden, Norman J. Murray, Thomas C. Vadakin and Joseph
H. Wesel, none of whom are compensated executive officers or
employees of the Company or its subsidiaries. Mr. Murray is
Chairman of the Board of Peoples Bank and Mr. Wesel is Chairman
of the Board of the Company. The Committee is to meet
periodically to review and recommend for approval by the Board
of Directors salaries, bonuses, employment agreements and
employee benefits plans for officers and employees, including
executive officers of the Company. The Committee also
supervises the operation of the Company's compensation plans,
selects those eligible employees who may participate in each
plan (where selection is permitted) and prescribes (where
permitted under the terms of the plan) the terms of any stock
options granted under any stock option plan of the Company.
Section 162(m) of the Internal Revenue Code of 1986, as
amended, prohibits a publicly-held corporation, such as the
Company, from claiming a deduction on its federal income tax
return for compensation in excess of $1 million paid for a given
fiscal year to the chief executive officer (or person acting in
that capacity) at the close of the corporation's fiscal year and
the four most highly compensated officers of the corporation,
other than the chief executive officer, at the end of the
corporation's fiscal year. The $1 million compensation deduction
limitation does not apply to "performance-based compensation."
The final regulations issued by the Internal Revenue Service
under Section 162(m) of the Internal Revenue Code of 1996 in
December of 1995 (the "IRS Regulations") set forth a number of
provisions which compensatory plans, such as the Performance
Compensation Plan, the Peoples Bancorp Inc. 1993 Stock Option
Plan (the "1993 Plan"), and the Peoples Bancorp Inc. 1995 Stock
Option Plan (the "1995 Plan"), must contain if the compensation
paid under such plans is to qualify as "performance-based" for
the purposes of Section 162(m). In order to qualify as
"performance-based" under the proposed IRS Regulations, the
compensation must be paid solely on account of the attainment of
one or more performance goals set by a compensation committee
comprised solely of two (2) or more outside directors. The
performance goals must be approved by a majority of shareholders
prior to payment of the remuneration and the compensation
committee must certify to the satisfaction of the goals. Due to
the fact that all executive officers of the Company receive
compensation at levels substantially below the $1 million
deductibility limit, the Committee does not propose at this time
to present for shareholder approval performance goals such as
those provided in the Incentive Bonus Plan discussed below. The
Company has determined that it is not necessary to modify the
Peoples Bancorp Inc. 1993 Stock Option Plan at this time since
no further grants will be made to anyone listed in the Summary
Compensation Table. The 1995 Plan complies with Section 162(m)
and the IRS Regulations so that any compensation which may be
received thereunder by executive officers of the Company will
qualify as "performance-based". The Committee will rely, from
time to time, upon advice of the Company's General Counsel
regarding the appropriateness of presenting the Incentive Bonus
Plan, or any similar plan, to shareholders.
The Committee operates under the principle that the
compensation of executive officers should be directly and
significantly related to the financial performance of the
Company. The compensation philosophy of the Company reflects a
commitment to reward executive officers for performance through
cash compensation and through plans designed to enhance the
long-term commitment of officers and employees to the Company
and its subsidiaries. The cash compensation program for
executive officers consists of two elements, a base salary
component and an incentive component payable under the Incentive
Bonus Plan. The combination of base salary and incentive
compensation is designed to relate total cash compensation
levels to the performance of the Company, its subsidiaries and
the individual executive officer. The salaries of executive
officers of the Company, including Mr. Evans' salary, have
remained without substantial adjustment for a number of years,
except for limited increases reflecting cost of living raises
and special meritorious increases or adjustments reflecting
increased responsibilities and promotions. This philosophy was
reflected in Mr. Evans' 1997 base salary, which increased only
4.67% from the prior year. This adjustment was designed to
reflect cost of living increases. Primary reliance has been
placed on the Incentive Bonus Plan for compensation adjustments.
An Incentive Bonus Plan was established in 1988 for certain
senior officers of the Company and its subsidiaries, including
Mr. Evans and the other executive officers of the Company. The
purpose of the Plan was to base compensation, in part, on the
profit performance of the Company. Beginning in 1996, the
Incentive Bonus Plan applied to all employees of the Company and
its subsidiaries. Each year, in January, the Committee
establishes minimum levels of return on equity and net income
which must be met before any incentive bonus is paid. If such
minimum levels are met, each officer or employee receives an
incentive bonus equal to a predetermined percentage of salary,
based on the amount by which net income exceeds the minimum
level, up to an approximate maximum of 25% of salary.
Consequently, higher net income creates higher incentive
bonuses.
In late 1996, the Company established a new Performance
Compensation Program ("Program") in which all employees of the
Company and its subsidiaries are eligible to participate. This
Program replaced the Company's Incentive Bonus Plan established
in 1988 for certain senior officers of the Company and its
subsidiaries. The Company's Executive Committee and Board of
Directors approved the Program in late 1996 for implementation
and use in the 1997 calendar year.
The Program is designed to reward all employees for balanced
growth and increased profitability. The amount of the award
available for distribution is based upon the Company's
performance with regard to specified performance goals. In
1997, the majority of potential incentive payout was based on
Company's consolidated financial results. The remaining
incentive payout for employees was based on the results of
performance goals in certain subordinate models (such as
subsidiary or branch models). This payout percentage may be
adjusted on an annual basis.
In 1997, the performance goals focused on loan and deposit
growth, profitability, asset quality and productivity (increased
operational efficiency). The Program compared current year
performance to the immediately prior year and rewarded employees
for incremental growth in the key performance goals previously
listed. Each performance goal was weighted according to
contribution to net income. In general, the key performance
goals were evenly weighted for 1997. The Program also
established a range of payout percentages which reflected the
extent to which the Company met the performance goals. The
payout percentage was uniformly applied to the gross salaries of
each eligible employee. Consequently, enhanced performance in
relation to the performance goals creates higher incentive
bonuses. During 1997, performance goals, above listed, were
exceeded resulting in incremental growth causing a payout
percentage to Mr. Evans of 6.7% of his base salary and similar
payout percentages for each eligible employee.
The Company's long-term compensation program consists primarily
of stock options granted under the Company's 1993 Plan and the
1995 Plan. The Committee believes that stock ownership by
members of the Company's management and stock-based performance
compensation arrangements are important in aligning the
interests of management with those of shareholders, generally in
the enhancement of shareholder value. Options are granted under
both the 1993 Plan and the 1995 Plan with an exercise price
equal to the fair market value of the Company's common shares on
the date of grant. If there is no appreciation in the fair
market value of the Company's common shares, the options are
valueless. The Committee generally grants options based upon
its subjective determination of the relative current and future
contribution each officer has or may make to the long-term
welfare of the Company. On December 3, 1997, the Committee
granted incentive stock options to Mr. Evans covering 7,700
common shares at an exercise price of $43.75 for a term of ten
(10) years with vesting of 12.5% annually from January 1, 2000;
and tendered incentive stock options covering a total of 23,400
common shares to the key employees as a group, exclusive of Mr.
Evans, each for a term of ten (10) years with vesting of 25%
annually from January 1, 2000.
In order to further enhance Mr. Evans' long-term commitment to
Peoples Bank, Peoples Bank entered in a Deferred Compensation
Agreement with him in 1976. Under this Agreement, Mr. Evans
agreed to serve Peoples Bank as an employee until he reaches age
65 or until his earlier retirement, disability or death and
agreed not to engage in activities in competition with Peoples
Bank. The amount of $5,000 is automatically accrued to Mr.
Evans' account upon the completion of each year of service to
Peoples Bank until he reaches normal retirement age.
At various times in the past, the Company has adopted certain
broad-based employee benefit plans in which the Company's
executive officers are permitted to participate on the same
terms as non-executive officer employees who meet applicable
eligibility criteria, subject to legal limitations on the
amounts that may be contributed or the benefits that may be
payable under the plans.
To enhance the long-term commitment of the officers and
employees of the Company and its subsidiaries, the Company
established the Peoples Bancorp Inc. Retirement Savings Plan
(the "Peoples 401(k) Plan"). Mr. Evans, as well as all officers
and employees of the Company and its subsidiaries, may
participate in the Peoples 401(k) Plan, upon satisfying
applicable eligibility criteria. Company matching contributions
and participant contributions may be invested in common shares
providing each participant with motivation toward safe and sound
long-term growth of the Company. Company matching contributions
may vary at the discretion of the Board of Directors.
Submitted by the Compensation Committee of the Company's Board
of Directors:
Norman J. Murray, Rex E. Maiden,
Thomas C. Vadakin, and Joseph H. Wesel.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
-----------------------------------------------------------
Norman J. Murray, Chairman of the Board of Peoples Bank, serves
as a member of the Compensation Committee. Joseph H. Wesel,
Chairman of the Board of the Company, also serves as a member of
the Compensation Committee.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
------------------------------------------------
Summary of Cash and Certain Other Compensation
- ----------------------------------------------
The following table shows for the last three fiscal years, the
cash compensation paid by the Company and its subsidiaries, as
well as certain other compensation paid or accrued for those
years, to Robert E. Evans, the Chief Executive Officer of the
Company and the only executive officer of the Company whose
total annual salary and bonus for the 1997 fiscal year exceeded
$100,000.
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Awards
Annual Compensation --------
------------------- Underlying All Other
Name and Salary Bonus Options/SARs Compensation
Principal Position Year ($)(1) ($)(2) (#)(3) ($)(4)
- ------------------ ---- ------ ------ ------------ ------------
Robert E. Evans, 1997 $212,080 $12,712 7,700 (3) $8,048
President and Chief 1996 $196,900 $16,929 --- $7,250
Executive Officer 1995 $185,268 $21,975 --- $7,873
the Company and
of Peoples Bank
_________________________
(1) "Salary" includes fees received by Mr. Evans for services
rendered during 1997, 1996 and 1995 as a director of the Company
and its subsidiaries in the amounts of $16,900, $15,300 and
$15,700, respectively.
(2) All bonuses reported were earned by Mr. Evans pursuant to
the Performance Compensation Program..
(3) Represents options granted under the Peoples Bancorp Inc.
1995 Stock Option Plan.
(4) "All Other Compensation" for 1997 includes the contribution
of $3,048 to the Peoples 401(k) Plan on behalf of Mr. Evans to
match pre-tax elective deferral contributions (included under
"Salary") made by him. "All Other Compensation" for 1997 also
includes the amount of $5,000 which was accrued for the account
of Mr. Evans pursuant to the terms of a Deferred Compensation
Agreement between Mr. Evans and the Company. See the discussion
under "Deferred Compensation Agreement".
Grant of Options
- ----------------
The following table sets forth information concerning
individual grants of options made under the Peoples Bancorp Inc.
1995 Stock Option Plan (the "1995 Plan") during the 1997 fiscal
year to the named executive officer. The Company has never
granted stock appreciation rights.
1997 1997 Options
Name or Group Options # Exercise Price
- ------------------------------ -------- --------------
Robert E. Evans, President and
Chief Executive Officer 7,700 $43.75
All current executive officers
as a group 23,400 $43.75
Each nominee for Director,
except Robert E. Evans
Paul T. Theisen 2,239 $30.50
Thomas C. Vadakin 2,239 $30.50
All current directors who are
not executive officers as a group 38,467 $43.75
All employees (including all current
officers who are not executive
officers) as a group 22,700 $43.75
Option Exercises and Holdings
- -----------------------------
The following table sets forth information with respect to
unexercised options held as of the end of the 1997 fiscal year
by Mr. Evans. He exercised no options during the 1997 fiscal
year.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
-----------------------------------------------
<CAPTION>
Number of Number of
Securities Securities Underlying Value of Unexercised
Underlying Unexercised Options In-the-Money Options
Options Value at FY-End (#) at FY-End ($)<F1>
Name Exercised Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- --------------- --------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Evans 0 n/a 13,310 <F2> 16,170 <F2> $322,017 $174,582
______________________
<F1> "Value of Unexercised In-the-Money Options at FY-End" is
based upon the fair market value of the Company's common shares
on December 31, 1997 ($41.75) less the exercise price of
in-the-money options at the end of the 1997 fiscal year.
<F2> If Mr. Evans' employment with the Company and its
subsidiaries is terminated by reason of his retirement under the
provisions of any retirement plan of the Company or any
subsidiary or by reason of permanent disability or for any other
reason, other than for cause, the options may be exercised in
full for a period of three months following the date of
retirement or permanent disability, subject to the stated term
of the options. If Mr. Evans' employment is terminated by
reason of his death while an employee of the Company and/or a
subsidiary, the options may be exercised in full for a period of
one year, subject to the stated term of the options. If Mr.
Evans' employment is terminated for cause, his unexercised
non-vested options will be forfeited.
</FN>
</TABLE>
Pension Plan
- ------------
The following table shows the estimated annual pension benefits
payable upon retirement at age 65 on a lifetime annuity basis
under the Peoples Bancorp Inc. Retirement Plan, a funded,
noncontributory pension plan (the "Pension Plan"), to a covered
participant in specified compensation and years of service
classifications.
PENSION PLAN TABLE
------------------
Years of Service
-------------------------------------------
Annualized Average
Monthly Compensation 15 20 25 30 35
- -------------------- ------- ------- ------- ------- -------
$125,000 $33,281 $44,375 $55,468 $66,562 $66,562
$150,000 $40,406 $53,875 $67,343 $80,812 $80,812
$175,000 $40,406 $53,875 $67,343 $80,812 $80,812
$200,000 $40,406 $53,875 $67,343 $80,812 $80,812
$225,000 $40,406 $53,875 $67,343 $80,812 $80,812
$250,000 $40,406 $53,875 $67,343 $80,812 $80,812
Benefits listed in the Pension Plan Table are not subject to
deduction for Social Security benefits or other amounts and are
computed on a lifetime annuity basis.
Monthly benefits upon normal retirement (age 65) are based upon
40% of "average monthly compensation" plus 17% of the excess, if
any, of "average monthly compensation" over "covered
compensation". For purposes of the Pension Plan, "average
monthly compensation" is based upon the monthly compensation
(including regular salary and wages, overtime pay, bonuses and
commissions) of an employee averaged over the five consecutive
credited years of service which produce the highest monthly
average within the last ten years preceding retirement and
"covered compensation" is the average of the 35 years of social
security wage bases prior to social security retirement age
("covered compensation" for Robert E. Evans as of the end of the
1997 fiscal year was $44,448). 1997 annual compensation, to the
extent determinable, for purposes of the Pension Plan for Mr.
Evans was $212,080. As of the end of 1997 fiscal year, Mr.
Evans had 27 credited years of service.
Deferred Compensation Agreement
- -------------------------------
On November 18, 1976, Peoples Bank entered into a Deferred
Compensation Agreement with Mr. Evans. Under this Deferred
Compensation Agreement, Mr. Evans agreed to serve Peoples Bank
as an employee until he reaches age 65 or until his earlier
retirement, disability or death and agreed not to engage in
activities in competition with Peoples Bank. Under this
Agreement, Mr. Evans or his beneficiaries are entitled to
receive specified amounts upon Mr. Evans' retirement, disability
or death, which amounts are payable monthly for ten years (with
interest) or in one lump sum at the election of Peoples Bank.
The principal amount payable to Mr. Evans is based upon the sum
of the amount accrued for his account during his years of
employment with Peoples Bank. During the Company's 1997 fiscal
year, the amount of $5,000 was accrued for Mr. Evans' account
pursuant to his Deferred Compensation Agreement and as of
December 31, 1997, a total of $110,000 had been accrued to his
account. The amount of $5,000 will be accrued to Mr. Evans'
account upon the completion of each year of service to Peoples
Bank until he reaches normal retirement age.
Directors' Compensation
- -----------------------
Each director of the Company receives $600 per calendar quarter
and $600 for each meeting attended.
Effective January 1, 1991, the Company established the Peoples
Bancorp Inc. Deferred Compensation Plan for Directors of Peoples
Bancorp Inc. and subsidiaries (the "Directors' Plan").
Voluntary participation in the Directors' Plan enables a
director of the Company, or of one of its subsidiaries, to defer
all or a part of his or her director's fees, including federal
income tax thereon. Until January 2, 1998, such deferred fees
earn interest as provided in the Directors' Plan then in effect.
Distribution of the deferred funds is made in a lump sum or
annual installments beginning in the first year in which the
person is no longer a director. Effective January 2, 1998, the
Company amended and restated the Directors' Plan to incorporate
ertain changes in its provisions, including the types of funds
in which the deferred compensation allocated to participants'
accounts may be invested. The Board of Directors is submiting
the amended and restated Directors' Plan to the shareholders for
this consideration and approval. See "Proposal to Approve the
Peoples Bancorp Inc. Deferred Compensation Plan for Directors of
Peoples Bancorp Inc. and Subsidiaries".
Directors, other than those employed by the Company (the
"Non-Employee Directors"), are automatically granted options
under the 1993 Plan on the date they are first elected or
appointed as a director of the Company to purchase 1,331 common
shares. In addition, every other year at the Board meeting
immediately following the annual shareholders meeting,
commencing in 1993, all Non-Employee Directors then serving on
the Board of Directors, other than a Non-Employee Director who
was first elected as a director at such annual shareholders
meeting or first appointed as a director at the Board meeting
immediately following such annual shareholders meeting will
receive an automatic grant of options to purchase 1,331 common
shares; provided that the number of common shares subject to
options granted to Non-Employee Directors who have not served a
full two years on the Board will be prorated such that those
Non-Employee Directors will receive options to purchase only a
percentage of 1,331 common shares commensurate with the actual
portion of the two years that such Non-Employee Directors served
on the Board. Options granted to Non-Employee Directors under
the 1993 Plan have terms of ten years and become exercisable
with respect to 20% of the common shares subject thereto on the
date of grant and 20% on each of the first, second, third and
fourth anniversaries of the date of grant.
On April 4, 1995, each Non-Employee Director who had served on
the Company's Board and/or that of a subsidiary (a "Subsidiary
Board") for all or a portion of at least five calendar years
immediately preceding the January 1 before that date (the
"Five-Year Service Requirement") was automatically granted an
option to purchase 908 common shares and each Non-Employee
Director who had not satisfied the Five-Year Service Requirement
was granted an option for 182 common shares plus 182 common
shares for each calendar year (or portion thereof) served. On
the date of the 1998 annual meeting of shareholders, each
Non-Employee Director then serving who satisfies the Five-Year
Service Requirement will be automatically granted an option for
908 common shares and each Non-Employee Director then serving
who does not satisfy the Five-Year Service Requirement will be
granted an option for 182 common shares plus 182 common shares
for each calendar year (or portion thereof) served. Individuals
who are first elected or appointed to the Board after April 4,
1995, but prior to the 1998 annual meeting of shareholders or
between the 1998 and 2000 annual meetings of shareholders will
be automatically granted options on the date of such election or
appointment covering a pro-rata number of common shares based
upon the period before the 1998 or 2000 annual meeting of
shareholders, as appropriate. All options granted to
Non-Employee Directors under the 1995 Plan become exercisable
six months from the date of grant.
All options granted, and to be granted, to Non-Employee
Directors under the 1993 Plan and the 1995 Plan have, and will
have, an option price equal to 100% of the fair market value of
the Company's common shares on the date of grant.
If a Non-Employee Director ceases to be a director for reasons
other than his death, his options (whether granted under the
1993 Plan or the 1995 Plan) may be exercised for a period of
three months, subject to the stated term of the options. If a
Non-Employee Director ceases to be a director by reason of his
death, his options (whether granted under the 1993 Plan or the
1995 Plan) may be exercised for a period of one year, subject to
the stated term of the options. If a Non-Employee Director
ceases to be a director by reason of fraud or intentional
misrepresentation, embezzlement, misappropriation or conversion
of assets or opportunities of the Company, all of his options
granted under the 1995 Plan will immediately terminate.
PERFORMANCE GRAPH
-----------------
The following line graph compares the yearly percentage change
in the Company's cumulative total shareholder return (as
measured by dividing (i) the sum of (A) the cumulative amount of
dividends for the measurement period, assuming dividend
reinvestment, and (B) the difference between the price of the
Company's common shares at the end and the beginning of the
measurement period; by (ii) the price of the Company's common
shares at the beginning of the measurement period) against the
cumulative return for an index for NASDAQ Stock Market (U.S.
Companies) comprised of all domestic common shares traded on the
NASDAQ National Market System and the NASDAQ Small-Cap Market
and an index for NASDAQ Bank Stocks comprised of all depository
institutions (SIC Code #602) and depository institutions holding
companies (SIC Code #671) that are traded on the NASDAQ National
Market System and the NASDAQ Small-Cap Market ("NASDAQ Bank
Stocks"), for the five-year period ended December 31, 1997.
(actual numbers plotted on graph)
NASDAQ STOCKS
Year Ended Peoples Bancorp Inc. NASDAQ Bank Stocks (U.S. Companies)
- ---------- -------------------- ------------------ ----------------
12/31/92 100.00 100.00 100.00
12/31/93 116.24 114.04 114.80
12/31/94 137.08 113.63 112.21
12/31/95 152.68 169.22 158.70
12/31/96 193.70 223.41 195.19
12/31/97 311.34 377.44 239.53
Notes: 1. Total return assumes reinvestment of dividends.
2. Fiscal Year Ending December 31.
3. Return based on $100 dollars invested on December 31, 1989
in Peoples Bancorp common stock, an index for NASDAQ Stock
Market (U. S. Companies), and NASDAQ Bank Stocks.
PROPOSAL TO APPROVE THE PEOPLES BANCORP INC.
1998 STOCK OPTION PLAN
----------------------
(Item 2 on Proxy)
On February 12, 1998, the Board of Directors of the Company
adopted the Peoples Bancorp Inc. 1998 Stock Option Plan (the
"1998 Plan"), subject to approval by the shareholders. The text
of the 1998 Plan is set forth in Annex A to this Proxy
Statement. The Board recommends that the shareholders vote FOR
the approval of the 1998 Plan.
The Company also maintains the 1993 Plan and the 1995 Plan
under which incentive stock options ("ISOs") have been and, in
the case of the 1995 Plan, may be granted to key employees of
the Company and its subsidiaries; and non-qualified stock
options ("Non-Qualified Options") have been and, in the case of
the 1995 Plan, will be, automatically granted to Non-employee
Directors and directors of subsidiaries of the Company who are
neither directors of the Company nor employees of the Company or
any of its subsidiaries ("Subsidiary Directors"). As of
February 10, 1998, a total of 15,200 common shares remained
available for the grant of ISOs and 7,498 common shares remained
available for the grant of Non-qualified Options (ISOs and
Non-qualified Options are collectively referred to as "Options")
under the 1995 Plan and no common shares were available for the
grant of Options under the 1993 Plan. The Board believes that
the number of common shares remaining available for the grant of
new Options under the 1995 Plan is not sufficient to enable the
Company to issue stock option grants which the Company expects
to make over the next several years. The Board also believes
that the Company should have the flexibility to grant Options to
meet competitive conditions and the particular circumstances of
the individuals who may be eligible to receive Options. For
these reasons, the Board is recommending the adoption of the
1998 Plan which will make an additional 100,000 common shares
available to be reserved for issuance of Options.
The purposes of the 1998 Plan are to advance the interests of
the Company (a) by providing material incentive for the
continued services of those key employees and directors of the
Company and its subsidiaries and consultants and advisors, such
as members of an advisory board(s), to the Company and its
subsidiaries who are neither employees nor directors of the
Company or any of its subsidiaries ("Consultants"), each of whom
makes significant contributions toward the Company's success and
development, by encouraging those key employees, directors, and
Consultants to increase their proprietary interest in the
Company and (b) by attracting new able executives to employment
with the Company and its subsidiaries or to serve as directors
of the Company or one or more of its subsidiaries. To
accomplish these purposes, the 1998 Plan authorizes the grant of
"ISOs" as defined by Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), and Non-qualified Options.
The 1998 Plan authorizes the granting of Options with respect
to an aggregate of 100,000 common shares. If there is any
change in the common shares resulting from a stock split, stock
dividend, combination or exchange of shares or other similar
capital adjustment, the number of common shares available for
the grant of Options under the 1998 Plan, the number of common
shares subject to outstanding Options and the option price of
outstanding Options will be proportionately adjusted to reflect
the same. The 100,000 common shares reserved for issuance under
the 1998 Plan represent approximately 2.6% of the outstanding
common shares as of the Record Date. As of February 10, 1998,
ISOs to purchase an aggregate of 229,423 common shares were
outstanding and held by 29 employees, including executive
officers, under the 1993 Plan and the 1995 Plan; and
Non-qualified Options to purchase an aggregate of 68,701 common
shares were outstanding and held by 27 Non-employee Directors
and Subsidiary Directors. No Non-qualified Options have been
granted to employees. On February 10, 1998, the last reported
sales price of the common shares on The Nasdaq National Market
was $41.50.
The common shares covered by the 1998 Plan may be either
authorized but unissued shares or treasury shares. If any
Option granted under the 1998 Plan expires or is terminated
without having been exercised in full, the common shares
allocable to the unexercised portion of such Option will (unless
the 1998 Plan has been terminated) become available for
subsequent grants of Options under the 1998 Plan.
The following summary of certain provisions of the 1998 Plan is
qualified in its entirety by reference to the copy of the 1998
Plan attached hereto as Annex A.
Administration
- --------------
The 1998 Plan will be administered by a committee (the
"Committee") consisting of not less than three directors of the
Company appointed from time to time by the Board of Directors.
The Committee will grant ISOs and Non-qualified Options to key
employees of the Company and its subsidiaries under the 1998
Plan, grant Non-qualified Options to Subsidiary Directors under
the 1998 Plan, grant Non-qualified Options to Consultants under
the 1998 Plan, interpret the 1998 Plan and make all
determinations necessary for the administration of the 1998
Plan. The Compensation Committee of the Company's Board of
Directors will serve as the Committee under the 1998 Plan.
Eligibility; Limitations
- ------------------------
Officers and other key employees of the Company and its
subsidiaries (including the executive officer named in the
Summary Compensation Table), Subsidiary Directors and
Consultants selected by the Committee will be eligible to
receive Non-qualified Options (and, in the case of key
employees, ISOs) under the 1998 Plan. It is currently estimated
that the group of employees eligible to receive Options under
the 1998 Plan will approximate 40 persons, that the group of
Subsidiary Directors eligible to receive Non-qualified Options
under the 1998 Plan will approximate 20 persons and that the
group of Consultants eligible to receive Non-qualified Options
under the 1998 Plan will approximate 24 persons, in each case
with appropriate adjustments for any significant change in the
size or operations of the Company and its subsidiaries in the
future. Non-employee Directors will also be participants in the
1998 Plan solely for purposes of receiving certain Non-qualified
Options (see discussion on page 20). There are currently eight
Non-employee Directors of the Company (including two of the
individuals nominated for re-election as directors at the Annual
Meeting).
In addition to the limits imposed on the number of common
shares covered by Non-qualified Options granted to Non-employee
Directors (see discussion beginning on page 20), no key employee
may be granted Options covering, in the aggregate, more than
25,000 common shares during the period in which the 1998 Plan
remains in effect. The 1998 Plan also provides that the
aggregate fair market value (determined as of the time an ISO is
granted) of the common shares with respect to which ISOs may
become exercisable for the first time by any individual during
any calendar year (under all option plans of the Company and its
subsidiaries) may not exceed $100,000.
Of the 100,000 common shares which may be issued under the 1998
Plan, an aggregate of 30,000 common shares will be issuable to
Non-employee Directors, Subsidiary Directors and Consultants.
The remaining 70,000 common shares will be issuable to key
employees as ISOs or Non-qualified Options. In the event the
entire 30,000 common shares have not been covered by grants made
to Non-employee Directors, Subsidiary Directors and Consultants,
on or before the date of the 2002 Annual Meeting, that portion
of the 30,000 common shares not covered by grants so made may be
the subject of Options subsequently granted to key employees
under the terms of the 1998 Plan.
Other than Non-qualified Options to be granted to Non-employee
Directors, no determination has been made under the 1998 Plan as
to the individual identity of the persons to whom Options may be
granted or the number of common shares which may be allocated to
any specific person or persons.
The following table sets forth the number and exercise price of
Options granted during 1997 and 1998 (through February 18, 1998)
under the 1995 Plan (no Options were granted under the 1993 Plan
during that period) to (i) the executive officer of the Company
named in the Summary Compensation Table, (ii) all current
executive officers of the Company as a group, (iii) each nominee
for election as a director, (iv) all current directors who are
not executive officers as a group, and (v) all employees,
including current officers who are not executive officers, as a
group. No Options have been awarded to associates of any of the
directors, executive officers or nominees and, other than the
persons identified in the following table, no person received
five percent (5%) or more of the Options granted under the 1995
Plan during 1997 and 1998:
1997 1997 Options
Name or Group Options # Exercise Price
- ------------- --------- --------------
Robert E. Evans, President
and Chief Executive Officer 7,700 $43.75
All current executive
officers as a group 23,400 $43.75
Each nominee for Director,
except Robert E. Evans
Paul T. Theisen 2,239 $30.50
Thomas C. Vadakin 2,239 $30.50
All current directors who
are not executive officers
as a group 38,467 $43.75
All employees (including
all current officers who are
not executive officers)
as a group 22,700 $43.75
Duration of 1998 Plan
- ---------------------
No Options may be granted under the 1998 Plan after February
11, 2008.
Term of Options Granted to Key Employees
- ----------------------------------------
The period during which any Option granted to a key employee,
Subsidiary Director or Consultant may be exercised is determined
by the Committee, but no such Option may have a term of more
than ten years. Any ISO which is granted to an individual who,
on the effective date of the grant, owns of record and
beneficially more than 10% of the total combined voting power of
all classes of stock of the Company then outstanding and
entitled to vote, may not have a term of more than five years.
If the Company consolidates with, merges into, or transfers all
or substantially all of its assets to, another corporation, then
each outstanding Option will become exercisable in full, whether
or not then exercisable, immediately upon consummation of the
transaction. As a condition of any such transaction, the
Company will require the successor employer corporation to
continue the 1998 Plan and assume all obligations thereunder.
If the successor employer corporation terminates the employment
of any key employee within the one-year period immediately
following the consummation of the acquisition transaction, such
key employee will have the right to exercise his then
unexercised Options during the period ending on the earlier of
the expiration of the term of the Options or three months
following the date of termination of employment.
Exercise of Options Granted to Key Employees; Expiration and Termination
- ------------------------------------------------------------------------
Options granted to key employees will be exercisable at such
times and will be subject to such restrictions and conditions,
including the performance of a minimum period of service, as the
Committee may impose at the time of grant. However, if the
Committee does not specify another vesting schedule at the time
of grant, Options will become exercisable with respect to 25% of
the common shares after 24 months of continuous employment by
the Company and/or its subsidiaries and with respect to an
additional 25% of the common shares after each additional 12
months of continuous employment until fully exercisable.
If a key employee's employment with the Company and its
subsidiaries terminates for any reason other than (i) death,
(ii) Disability (as defined in Section 22(e)(3) of the Code),
(iii) retirement under the provisions of any retirement plan of
the Company or any subsidiary ("Normal Retirement"), or (iv) any
reason (other than for Cause, as defined in the 1998 Plan) after
the key employee has been employed by the Company and/or its
subsidiaries for at least ten consecutive years prior to
termination of employment, the portion of all ISOs which are not
then exercisable will terminate immediately. If the termination
of employment was due to (a) Normal Retirement or (b) a reason
other than Cause and the key employee had been employed by the
Company and/or its subsidiaries for at least ten consecutive
years prior to termination of employment, in each such case, the
key employee may exercise his ISOs in full for a period of three
months following the date of termination of employment, subject
to the term of the ISOs. If the termination of employment was
due to (a) Death or (b) Disability, the key employee (or a
representative of his estate in the case of his death) may
exercise his ISOs in full for a period of one year following the
date of termination of employment, subject to the term of the
ISOs. If the termination of employment was due to a reason
other than Cause and the key employee had not been employed by
the Company and/or its subsidiaries for at least ten consecutive
years prior to termination of employment, the key employee may
exercise only such ISOs as are then exercisable for a period of
three months following the date of termination of employment,
subject to the term of the ISOs. If the termination of
employment of the key employee was for Cause, all unexercised
ISOs will terminate immediately.
Non-qualified Options granted to key employees under the 1998
Plan will be exercisable following termination of employment for
such period of time and under such conditions as the Committee
may impose at the time of grant of such Non-qualified Options.
If, however, the Committee does not specify another
exercisability schedule in the event of termination of
employment, the provisions outlined in the following sentences
of this paragraph will be applicable. If a key employee's
employment with the Company and its subsidiaries terminates for
any reason other than (i) Death, (ii) Disability, (iii) Normal
Retirement or (iv) any reason (other than for Cause) after the
key employee has been employed by the Company and/or its
subsidiaries for at least ten consecutive years prior to
termination of employment, the portion of all Non-qualified
Options which are not then exercisable will terminate
immediately. If the termination of employment was due to (a)
Death, (b) Disability, (c) Normal Retirement or (d) a reason
other than Cause and the key employee had been employed by the
Company and/or its subsidiaries for at least ten consecutive
years prior to termination of employment, in each such case, the
key employee (or a representative of his estate in the case of
his death) may exercise his ISOs in full until the earlier to
occur of the expiration of the term of such Non-qualified
Options or two years following the date of death of the key
employee. If the termination of employment was due to a reason
other than cause and the key employee had not been employed by
the Company and/or its subsidiaries for at least ten consecutive
years prior to termination of employment, the key employee (or a
representative of his estate in the case of his death) may
exercise only such ISOs as are then exercisable until the
earlier to occur of the expiration of the term of such
Non-qualified Options or two years following the date of death.
If the termination of employment of the key employee was for
cause, all unexercised Non-qualified Options will terminate
immediately.
Exercise of Non-qualified Options Granted to Subsidiary
Directors and Consultants; Expiration and Termination
- -----------------------------------------------------
Non-qualified Options granted to Subsidiary Directors and
Consultants will be exercisable at such times and will be
subject to such restrictions and conditions as the Committee may
impose at the time of grant. If, however, the Committee does
not specify another exercisability schedule in the event of
termination of director status of a Subsidiary Director, certain
default provisions outlined in the 1998 Plan will apply.
Exercise Price of Options Granted to Key Employees, Subsidiary
Directors and Consultants
- --------------------------------------------------------------
The exercise price of any Option granted to a key employee will
not be less than 100% of the fair market value of the common
shares on the grant date. The exercise price of any
Non-qualified Option granted to a Subsidiary Director or to a
Consultant will also not be less than 100% of the fair market
value of the common shares on the grant date. Fair market value
is defined for purposes of the 1998 Plan to mean the last
reported sales price of a common share on The Nasdaq National
Market or on any securities exchange on which the common shares
may be listed. In the case of any ISO granted to a key employee
who, on the effective date of the grant, owns of record and
beneficially more than 10% of the total combined voting power of
all classes of stock of the Company then outstanding and
entitled to vote, however, the exercise price per share must be
at least 110% of the fair market value of a common share on the
grant date.
Non-qualified Option Grants to Non-employee Directors
- -----------------------------------------------------
Each Non-employee Director then serving on the Company's Board
of Directors and who has served on the Board and/or the board of
directors of a subsidiary of the Company (a "Subsidiary Board")
for all or a portion of at least the five calendar years
immediately preceding the date of grant, will automatically be
granted a Non-qualified Option for 750 common shares effective
on the date of the Annual Meeting and for 750 common shares
effective on the date of the 2000 Annual Meeting. Each
Non-Employee Director then serving on the Company's Board and
who has served on the Board and/or a Subsidiary Board for fewer
than the five calendar years (including all or any portion of
any such year) immediately preceding the date of grant, will
instead be automatically granted a Non-qualified Option for 150
common shares plus 150 common shares for all or any portion of
each calendar year preceding the date of grant during which such
Non-Employee Director has served on the Board and/or a
Subsidiary Board. Any individual who was not a member of the
Company's Board on the date of the Annual Meeting, (i) who is
subsequently appointed or elected to the Board at least six
months prior to the date of the 1999 Annual Meeting will
automatically be granted a Non-qualified Option on the date of
such appointment or election for the same number of common
shares as received by individuals who were Board members on the
date of the Annual Meeting; (ii) who is subsequently appointed
or elected to the Board less than six months prior to the date
of the 1999 Annual Meeting but prior to the 1999 Annual Meeting
will automatically be granted a Non-qualified Option on the date
of such appointment or election for 75% of the number of common
shares received by persons serving as members of the Board on
the date of the Annual Meeting; (iii) who is subsequently
appointed or elected to the Board on or after the date of the
1999 Annual Meeting but at least six months prior to the date of
the 2000 Annual Meeting will automatically be granted a
Non-qualified Option on the date of such appointment or election
for 50% of the number of common shares received by persons
serving as Board members on the date of the Annual Meeting; and
(iv) who is subsequently appointed or elected to the Board less
than six months prior to the 2000 Annual Meeting but prior to
the 2000 Annual Meeting will automatically be granted a
Non-qualified Option on the date of such appointment or election
for 25% of the common shares received by persons serving as
Board members on the date of the Annual Meeting. Any individual
who was not a member of the Board on the date of the 2000 Annual
Meeting and who is subsequently appointed or elected to the
Board prior to the date of the 2002 Annual Meeting will
automatically be granted a Non-qualified Option on the same
basis as described in the immediately preceding sentence. Any
individual who was serving as a Subsidiary Director and is
subsequently appointed or elected as a Non-employee Director
after the date of the Annual Meeting but prior to the date of
the 2000 Annual Meeting, or after the date of the 2000 Annual
Meeting but prior to the date of the 2002 Annual Meeting, as the
case may be, and who is to be granted a Non-qualified Option
pursuant to either of the two immediately preceding sentences,
will have deducted from the number of common shares covered by
the Non-qualified Option to be granted to him as a Non-employee
Director, the number of common shares covered by any
Non-qualified Option which he received as a Subsidiary Director.
Each Non-qualified Option granted to a Non-employee Director
will have an exercise price equal to 100% of the fair market
value of the common shares on the grant date and a term of ten
years. If a Non-employee Director ceases to be a director of
the Company and/or a Subsidiary for any reason other than his
death or for Cause, the Non-qualified Options granted to him
under the 1998 Plan may be exercised in full until the
expiration of the term of the Non-qualified Options. However,
if the former Non-employee Director dies prior to the expiration
of the term of the Non-qualified Options, such Non-qualified
Options may be exercised only until the earlier of the
expiration of such term or two years following the date of
death. If a Non-employee Director ceases to be a director of
the Company and/or a Subsidiary because of his death, such
Non-qualified Options may be exercised in full until the earlier
of the expiration of the term of the Non-qualified Options or
two years following the date of death. If a Non-employee
Director ceases to be a director of the Company and/or a
Subsidiary for Cause, all of his then unexercised Non-qualified
Options will immediately terminate.
Payment of Exercise Price
- -------------------------
Payment of the exercise price of any Option granted under the
1998 Plan may be made in cash or by tendering common shares (by
either actual delivery of common shares or by attestation, with
such common shares valued at fair market value as of the
exercise date) or in any combination thereof as determined by
the Committee. The Committee may also permit a participant to
elect to pay the option exercise price by authorizing a third
party to sell common shares (or a sufficient portion of the
common shares) acquired upon exercise of the Option and remit to
the Company a sufficient portion of the sale proceeds to pay the
entire option exercise and any tax withholding resulting from
such exercise.
Transferability of Options
- --------------------------
With the permission of the Committee, a participant who has
been granted a Non-qualified Option under the 1998 Plan may
transfer such Non-qualified Option to a revocable inter vivos
trust as to which the participant is the settlor or may transfer
such Non-qualified Option to a "Permissible Transferee". A
Permissible Transferee is any member of the immediate family of
the participant, any trust, whether revocable or irrevocable,
solely for the benefit of members of the participant's immediate
family, or any partnership whose only partners are members of
the participant's immediate family. Any such transferee of a
Non-qualified Option will remain subject to all of the terms and
conditions applicable to such Non-qualified Option and subject
to the rules and regulations prescribed by the Committee. A
Non-qualified Option may not be retransferred by a Permissible
Transferee except by will or the laws of descent and
distribution and then only to another Permissible Transferee.
Other than as described above, an Option granted under the 1998
Plan may not be transferred except by Will or the laws of
descent and distribution and, during the lifetime of the person
to whom granted, may be exercised only by such person, his
guardian or legal representative.
Amendments and Termination
- --------------------------
The Committee, with approval of the Board of Directors, may
terminate the 1998 Plan at any time, and may amend the 1998 Plan
from time to time, without obtaining the approval of the
shareholders of the Company except as such shareholder approval
may be required to satisfy (a) the requirements of Rule 16b-3
under the Exchange Act or any successor provision, (b)
applicable requirements of the Code or (c) applicable
requirements of any securities exchange on which are listed any
of the Company's equity securities or any requirements
applicable to issuers whose securities are traded in The Nasdaq
National Market. No action to amend or terminate the 1998 Plan
may reduce the number of any participant's Options or adversely
change the terms or conditions thereof without the participant's
consent. If the 1998 Plan is terminated, any unexercised
Options will continue to be exercisable in accordance with its
terms.
Federal Income Tax Consequences
- -------------------------------
Based on current provisions of the Code and the existing
regulations thereunder, the anticipated federal income tax
consequences in respect of Options granted under the 1998 Plan
are as described below. The following discussion is not
intended to be a complete statement of applicable law and is
based upon the federal income tax laws in effect on the date
hereof.
ISOs
----
A participant who is granted an ISO does not recognize taxable
income on either the date of grant or the date of exercise.
However, upon the exercise of the ISO, the difference between
the fair market value of the common shares received and the
exercise price is a tax preference item potentially subject to
the alternative minimum tax. However, on the later sale or
other disposition of the common shares, generally only the
difference between the fair market value of the common shares on
the exercise date and the amount realized on the sale or
disposition is includable in alternative minimum taxable income.
Upon disposition of common shares acquired upon the exercise
of an ISO, capital gain or loss is generally recognized in an
amount equal to the difference between the amount realized on
the sale or disposition and the exercise price. However, if the
participant disposes of the common shares within two years of
the date of grant or within one year of the date of the issuance
of the common shares to the participant (a "Disqualifying
Disposition"), then the participant will recognize ordinary
income, as opposed to capital gain, at the time of disposition
in an amount generally equal to the lesser of (i) the amount of
gain realized on the disposition, or (ii) the difference between
the fair market value of the common shares received on the date
of exercise and the exercise price. Any remaining gain or loss
is treated as a short-term, mid-term or long-term capital gain
or loss, depending upon the period of time the common shares
have been held.
The Company is not entitled to a tax deduction upon either the
exercise of an ISO or the disposition of common shares acquired
pursuant to such exercise, except to the extent that the
participant recognizes ordinary income in a Disqualifying
Disposition. Ordinary income from a Disqualifying Disposition
will constitute compensation but will not be subject to tax
withholding, nor will it be considered wages for payroll tax
purposes.
If the holder of an ISO pays the exercise price, in whole or
in part, with already-owned common shares, the exchange should
not effect the ISO tax treatment of the exercise. Upon such
exchange, and except for Disqualifying Dispositions, no gain or
loss is recognized by the participant upon delivering
already-owned common shares to the Company for payment of the
exercise price. The common shares received by the participant,
equal in number to the already-owned common shares exchanged
therefor, will have the same basis and holding period for
capital gain purposes as the already-owned common shares. (The
participant, however, will not be able to use the prior holding
period for the purpose of satisfying the ISO statutory holding
period requirements.) Common shares received by the participant
in excess of the number of already-owned common shares will have
a basis of zero and a holding period which commences as of the
date the common shares are transferred to the participant upon
exercise of the ISO. If the exercise of an ISO is effected
using common shares previously acquired through the exercise of
an ISO, the exchange of such already-owned common shares will be
considered a disposition of such common shares for the purpose
of determining whether a Disqualifying Disposition has occurred.
Non-qualified Options
---------------------
A participant receiving a Non-qualified Option does not
recognize taxable income on the date of grant of the
Non-qualified Option, provided that the Non-qualified Option
does not have a readily ascertainable fair market value at the
time it is granted. In general, the participant must recognize
ordinary income at the time of exercise of the Non-qualified
Option in the amount of the difference between the fair market
value of the common shares on the date of exercise and the
exercise price. The ordinary income recognized will constitute
compensation for which tax withholding generally will be
required. The amount of ordinary income recognized by a
participant will be deductible by the Company in the year that
the participant recognizes the income if the Company complies
with the applicable withholding requirements.
If the sale of the common shares could subject the participant
to liability under Section 16(b) of the Exchange Act, the
participant generally will recognize ordinary income only on the
date that the participant is no longer subject to such liability
in an amount equal to the fair market value of the common shares
on such date less the exercise price. Nevertheless, the
participant may elect, under Section 83(b) of the Code within 30
days of exercise to recognize ordinary income as of the date of
exercise, without regard to restriction of Section 16(b).
Common shares acquired upon exercise of a Non-qualified Option
will have a tax basis equal to their fair market value on the
exercise date or other relevant date on which ordinary income is
recognized, and the holding period for the common shares
generally will begin on the date of exercise or such other
relevant date. Upon subsequent disposition of the common
shares, the participant will recognize long-term capital gain or
loss if the participant has held the common shares for more than
18 months prior to the disposition, mid-term capital gain or
loss if the participant has held the common shares for at least
one year but less than 18 months, or short-term capital gain or
loss if the participant has held the common shares for one year
or less.
If a holder of a Non-qualified Option pays the exercise price,
in whole or in part, with already-owned common shares, the
participant will recognize ordinary income in the amount by
which the fair market value of the common shares received
exceeds the exercise price. The participant will not recognize
gain or loss upon delivering such already-owned common shares to
the Company. The common shares received by a participant, equal
in number to the already-owned common shares exchanged therefor,
will have the same basis and holding period as such
already-owned common shares. Common shares received by a
participant in excess of the number of such already-owned common
shares will have a basis equal to the fair market value of such
additional common shares as of the date ordinary income is
recognized. The holding period for such additional common
shares will commence as of the date of exercise or other
relevant date.
Other Matters
-------------
The 1998 Plan is intended to comply with Section 162(m) of the
Code with respect to Options granted under it. The 1998 Plan is
intended to satisfy the requirements of the IRS Regulations
under Section 162(m). The Company is seeking shareholder
approval of the 1998 Plan in a good faith effort to qualify
compensation received thereunder as "performance-based" for
purposes of Section 162(m). If such shareholder approval is not
obtained, the 1998 Plan will be null and void.
Recommendation and Vote
- -----------------------
The Board of Directors of the Company unanimously recommends
that the shareholders vote for the proposal to approve the 1998
Plan. Unless otherwise directed, the persons named in the
enclosed proxy will vote the common shares represented by all
proxies received prior to the Annual Meeting and not properly
revoked, in favor of the proposal to approve the 1998 Plan.
Shareholder approval of the 1998 Plan will require the
affirmative vote of the holders of a majority of the common
shares present in person or by proxy, and entitled to vote on
the proposal, to approve the 1998 Plan. As of the Record Date,
the current executive officers and directors of the Company and
its Subsidiaries, their respective associates and the Trust
Department of Peoples Bank held approximately 24.9% of the
common shares of the Company and corresponding voting power.
PROPOSAL TO APPROVE THE PEOPLES BANCORP INC.
DEFERRED COMPENSATION PLAN FOR DIRECTORS
OF PEOPLES BANCORP INC. AND SUBSIDIARIES
--------------------------------------------
(Item 3 on Proxy)
Effective January 1, 1991, the Company established a deferred
compensation plan to provide directors of the Company and its
subsidiaries with an opportunity to defer compensation otherwise
payable to them from the Company and/or its subsidiaries.
Effective January 2, 1998, the Company amended and restated the
deferred compensation plan to incorporate certain changes in its
provisions, including the types of funds in which the deferred
compensation allocated to participants' accounts may be
invested. Through the operation of the Peoples Bancorp Inc.
Deferred Compensation Plan for Directors of Peoples Bancorp Inc.
and Subsidiaries (the "Directors' Plan"), the Company intends to
recognize the value to the Company and its subsidiaries of the
past and present services of directors, to encourage their
continued service to the Company and its subsidiaries and to be
able to attract and retain superior directors.
Through participation in the Directors' Plan, as of January 2,
1998, directors of the Company and its subsidiaries may acquire
common shares of the Company. The maximum number of common
shares which may be acquired under the Plan is 50,000 or 1.3% of
the common shares outstanding on February 10, 1998. The Board
is aware that under the rules of The Nasdaq Stock Market, the
Company may not establish a plan under which the directors may
be issued common shares in an amount exceeding the lesser of 1%
of the outstanding number of common shares or 25,000 common
shares (the "Nasdaq Approval Limitation"), unless the
shareholders approve such plan. The Board of Directors believes
that a smaller number of common shares than the 50,000 currently
authorized under the Directors' Plan would not be sufficient to
accommodate the elections to defer compensation which it expects
the directors of the Company and its subsidiaries to make over
the next several years. Accordingly, the Board of Directors
recommends that the shareholders approve the Directors' Plan in
the form set forth in Annex B to this Proxy Statement. Until
such time as the Directors' Plan is approved by the
shareholders, the Board has limited the number of common shares
which may be issued under the Directors' Plan to the Nasdaq
Approval Limitation.
The common shares covered by the Directors' Plan will be common
shares purchased in the open market or in privately negotiated
transactions and held by the trustee (the "Trustee") of the
trust (the "Trust") established by the Company to hold the
assets related to the Directors' Plan, as more fully described
below under "Administration."
The Company currently anticipates that the Directors' Plan will
continue in effect for an indefinite period of time, subject to
any need to obtain further shareholder approval under the rules
of The Nasdaq Stock Market if the number of common shares to be
issued under the Directors' Plan is increased. However, the
committee which administers the Directors' Plan has the
authority to terminate the Directors' Plan at any time subject
to the rights of participants to receive amounts allocated to
their respective Deferred Compensation Accounts under the
Directors' Plan. In the event of a merger or consolidation of
the Company or any of its subsidiaries with or into any other
corporation, or in the event substantially all of the assets of
the Company or any of its subsidiaries are transferred to
another corporation, the successor corporation resulting from
the merger or consolidation, or the transferee of such assets,
as the case may be, must, as a condition to the consummation of
the merger, consolidation or transfer assume the obligations of
the Company or the subsidiary of the Company under the Plan.
The following summary of certain provisions of the Directors'
Plan is qualified in the entirety by reference to the copy of
the Directors' Plan attached hereto as Annex B.
Administration
- --------------
The Directors' Plan will be administered by a committee which
is comprised of three directors appointed by, and serving at the
pleasure of, the Company's Board of Directors (the "Directors'
Plan Committee"). The Directors' Plan Committee has the power
to construe and interpret the Directors' Plan, and to determine
all questions of eligibility and of status, rights and benefits
of participants and other persons claiming benefits under the
Directors' Plan.
The Company has established a trust (the "Trust") to hold the
assets contributed thereto by the Company until paid to
Directors' Plan participants and their beneficiaries. The Trust
will hold the assets subject to the claims of the Company's
creditors in the event of the Company's insolvency. Peoples
Bank, a subsidiary of the Company, has been appointed as Trustee
and may be removed by the Company on 30 days' notice. The
Company will pay all administrative expenses and the Trustee's
fees and expenses. The Trustee is responsible for the
administration of the assets held in the Trust and for making
payments to Directors' Plan participants and their beneficiaries
in accordance with the terms of the Directors' Plan. All rights
associated with assets of the Trust will be exercised by the
Trustee (or the person designated by the Trustee) including, but
not limited to, the voting rights with respect to the common
shares held in the Trust.
It is intended that a portion of the assets of the Trust will
be invested by the Trustee in common shares or other obligations
issued by the Company. The Trustee may purchase and sell common
shares of the Company for the Plan wherever the common shares
are traded, in the over-the-counter market or in negotiated
transactions. The Trustee has sole discretion in determining
the terms of any such purchase or sale. To the extent that
common shares are purchased for the Plan in the open market, the
Trustee will cause each such purchase to be made by an entity
(the "Purchasing Agent") which qualifies as an "agent
independent of the issuer," as that term is used in Rule 10b-18
promulgated under the Exchange Act.
With respect to the portion of the assets of the Trust which is
not invested in common shares, the Trustee will invest and
reinvest such assets and keep them invested, without distinction
between principal and income, in three-year certificates of
deposit or an equivalent deposit account. In making such
investments, the Trustee will not be restricted from investing
assets of the Trust in certificates of deposit or other deposit
accounts offered by the Trustee.
Eligibility
- -----------
Any person who is a statutory director, an emeritus director or
an honorary director of the Company or any subsidiary of the
Company (each, a "Director") will be eligible to participate in
the Directors' Plan. Each Director who was participating in the
deferred compensation plan as of January 2, 1998 will continue
as a participant in the Directors' Plan as of that date. Each
person who first becomes a Director after January 2, 1998, will
become eligible to participate in the Directors' Plan as of the
date on which he becomes a Director. As of February 10, 1998,
there were 34 Directors eligible to participate in the
Directors' Plan (including all of the current members of the
Company's Board of Directors) and Twenty-one Directors
(including five members of the Company's Board of Directors)
were participating in the Directors' Plan.
Elections to Defer
- ------------------
Any Director who wishes to defer the payment of any portion of
his annual retainer and/or his meeting fees (collectively,
"Eligible Compensation") must complete and file a written
Deferral Notice with the Secretary of the Company before the
December 31st preceding the calendar year with respect to which
Eligible Compensation is to be deferred (each such calendar year
is considered a "Plan Year"). If a Director first becomes
eligible to participate in the Directors' Plan after a Plan Year
has commenced, he may complete a Deferral Notice at any time
prior to the date on which he is first eligible to participate
in the Directors' Plan and the Deferral Notice will apply only
to Eligible Compensation payable to, or earned by, the
participant after the Committee receives the Deferral Notice. A
participant must designate on his Deferral Notice: (1) the
portion (by percentage or by a flat dollar amount) of his
Eligible Compensation to be deferred (such amount being referred
to as "Company Contributions"); (2) the percentage of Company
Contributions to be allocated to his Cash Account and to his
Stock Account; and (3) the form of distribution of amounts
allocated to his Stock Account (cash or common shares). Any
election will be irrevocable with respect to the affected
Company Contributions.
Each Deferral Notice will remain in effect for future Plan
Years until changed or revoked by a participant. A participant
may terminate his election to defer payment of Eligible
Compensation by delivering written notice to the Company's
Secretary. Any such termination will become effective as of the
end of the Plan Year in which notice of termination is given
with respect to Eligible Compensation payable for services as a
Director during subsequent Plan Years.
In addition, each participant who had a Deferred Compensation
Account balance as of January 2, 1998 had an opportunity to
elect the percentage of such balance to be allocated to his Cash
Account and to his Stock Account. Such election is irrevocable
with respect to the affected Deferred Compensation Account
balance.
The Directors' Plan Committee will establish a Deferred
Compensation Account for each participant in the Directors'
Plan. A participant's Deferred Compensation Account will have
two subaccounts: a Cash Account and a Stock Account. The
Eligible Compensation which a participant elects to defer will
be treated as if it were set aside in the subaccounts of his
Deferred Compensation Account as of the first business day of
each calendar quarter in which the Eligible Compensation would
otherwise have been paid to the participant.
As of the first business day of each calendar quarter (each, an
"Adjustment Date"), the Directors' Plan Committee will credit
the balance in a participant's Cash Account with the applicable
Company Contributions and with such additional amounts
("Additions") which will either (1) mirror a specific interest
rate equal to the rate of return paid by Peoples Bank on a
three-year certificate of deposit or an equivalent deposit
account as of the last business day preceding the applicable
Adjustment Date; or (2) to the extent that a certificate of
deposit is purchased by the Trustee under the Trust to provide
benefits under the Directors' Plan, be equal to the actual rate
of interest paid with respect to the purchased certificate of
deposit. The crediting of Additions will be determined by
multiplying the participant's Cash Account balance as of each
month of the quarter preceding the Adjustment Date by the
applicable rate of interest determined under the preceding
sentence. The crediting of Additions will continue so long as
there is a balance in the participant's Cash Account regardless
of whether the participant has terminated service as a Director
or has died.
As of each Adjustment Date (or such later date on which common
shares are actually acquired by the Trust), the amount credited
to the Stock Account of each participant will be divided by the
then Fair Market Value of the common shares. For purposes of
the Directors' Plan, "Fair Market Value" means the most recent
closing price of the common shares. On February 10, 1998, the
closing price of the common shares was $41.50. Upon completion
of this calculation, each Stock Account will be credited with
the resulting number of whole common shares and any remaining
amounts will continue to be credited to the Stock Account until
converted to whole common shares at a future Adjustment Date or
purchase date. The Stock Account of each participant will be
credited with cash dividends on the common shares on and after
the date credited to the Stock Account. At the following
Adjustment Date (or, if later, the date on which common shares
are actually acquired by the Trust), the amount of cash
dividends credited to each Stock Account (and any other amounts
then credited to such Account) will be divided by the then Fair
Market Value of the common shares; and the Stock Account of each
participant will be credited with the resulting number of whole
common shares and any remaining amounts will continue to be
credited to the Stock Account until converted to whole common
shares, at a future Adjustment Date or purchase date. The
number of common shares in each participant's Stock Account will
be adjusted from time to time by the Company to reflect stock
splits, stock dividends or other changes in common shares of the
Company resulting from a change in the Company's capital
structure.
Since the amounts to be allocated to each participant's
Deferred Compensation Account (and the subaccounts thereunder)
through the operation of the Directors' Plan are determined
based upon the participant's Eligible Compensation, the
elections made in his Deferral Notice (if a Director chooses to
participate), the interest rate then payable with respect to
amounts credited to his Cash Account at the beginning of each
calendar quarter and the fair market value of the Company's
common shares on the dates such common shares are purchased for
his Stock Account, it is not possible to determine the amounts
which will be allocated to each participant under the Directors'
Plan. Mr. Evans has elected to defer 100% of his Eligible
Compensation as a Director for the 1998 fiscal year and
allocated 0% to his Cash Account and 100% to his Stock Account.
The other directors of the Company who have chosen to
participate in the Directors' Plan have elected to defer an
average of 60% of their respective Eligible Compensation and
allocated an average of 9% to their respective Cash Accounts
and an average of 91% to their respective Stock Accounts.
The only right which a participant will have with respect to
his Deferred Compensation Account (and amounts allocated to the
subaccounts thereunder) will be to receive payments therefrom as
described below.
Payment of Deferred Compensation
- --------------------------------
Distribution of a participant's Deferred Compensation Account
will begin on the first business day of the calendar month
following the date of the participant's termination of service
as a Director due to resignation, retirement, death or
otherwise. A participant's Deferred Compensation Account will
be distributed to the participant either in a single lump sum
payment or in equal annual installments over a period of not
more than five years. To the extent that a Deferred
Compensation Account is distributed in installment payments, the
undisbursed portion of such Account will continue to be credited
with Additions. The method of distribution (lump sum or
installments) must be elected by a participant prior to the date
on which he ceases to be a Director. In the absence of an
election, the amount in a participant's Deferred Compensation
Account will be distributed in installments over a period of
five years. Cash Accounts will be distributed in cash. Stock
Accounts will be distributed either in common shares or in cash,
as elected by the participant on the appropriate Deferral
Notice. In the event that a distribution of a participant's
Stock Account is to be made in cash, the Committee will
determine the amount of such distribution by using the Fair
Market Value of the common shares as of the date of distribution
or, if later, the date on which such common shares are actually
sold by the Trust.
If a participant dies before payment of the full amount in his
Deferred Compensation Account, the Company will, in its
discretion, either pay or continue to pay the unpaid amount to
the participant's beneficiary or beneficiaries (a) in the same
manner as such amount would have been paid to the participant,
or (b) in a lump sum settlement of the remaining amount in the
participant's Deferred Compensation Account no sooner than the
day after and not later than eighteen months following the
participant's death. In addition, the Directors' Plan Committee
may, in its discretion, accelerate the payment of the amount in
a participant's Deferred Compensation Account without the
consent of the participant or the participant's beneficiary,
estate or any other person or persons claiming through or under
him. In making such determination, due consideration may be
given to the health, financial circumstances and family
obligations of the participant. In this regard, the participant
(or after his death, his beneficiary) may be consulted; however,
he (or they) will have no voice in the decision reached by the
Directors' Plan Committee.
If a participant or beneficiary is declared incompetent and a
guardian, conservator or other person legally charged with the
care of his person or of his estate is appointed, any benefits
under the Plan to which such participant or beneficiary is
entitled will be paid to such guardian, conservator or other
person legally charged with the care of his person or his
estate. Except as provided in the preceding sentence, when the
Directors' Plan Committee, in its sole discretion, determines
that a participant or beneficiary is unable to manage his
financial affairs, the Directors' Plan Committee may, but will
not be required to, direct the Company to make distribution(s)
to any one or more of the spouse, lineal ascendants or
descendants or other closest living relatives of such
participant or beneficiary who demonstrates to the satisfaction
of the Committee the propriety of making such distribution(s).
In the event any taxes are required by law to be withheld or
paid from any payments made pursuant to the Plan, the Directors'
Plan Committee will deduct such amounts from such payments and
will transmit the withheld amounts to the appropriate taxing
authority.
Assignment of Benefits under the Directors' Plan
- ------------------------------------------------
No right or benefit under the Plan may be assigned,
transferred, pledged or encumbered except by will or by the laws
of descent and distribution. Each participant in the Plan may
name one or more beneficiaries and contingent beneficiaries to
whom distribution of the amount in the participant's Deferred
Compensation Account will be made upon his death, by making a
written designation in a form acceptable to the Directors' Plan
Committee.
Amendment of the Directors' Plan
- --------------------------------
The Directors' Plan Committee may amend the Directors' Plan
from time to time; however, no amendment may have a material
adverse affect on the accrued benefits of any participant under
the Directors' Plan. In addition, no amendment which would
increase the number of common shares issuable under the
Directors' Plan may be adopted without shareholder approval if
such approval is then required under the rules of The Nasdaq
Stock Market.
Recommendation and Vote
- -----------------------
The Board of Directors of the Company unanimously recommends
that the shareholders vote for the proposal to approve the
Directors' Plan. Unless otherwise directed, the persons named
in the enclosed proxy will vote the common shares represented by
all proxies received prior to the Annual Meeting and not
properly revoked, in favor of the proposal to approve the
Directors' Plan.
Shareholder approval of the 1998 Plan will require the
affirmative vote of the holders of a majority of the common
shares present in person or by proxy, and entitled to vote on
the proposal, to approve the 1998 Plan. As of the Record Date,
the current executive officers and directors of the Company and
it subsidiaries, their respective associates and the Trust
Department of Peoples Bank held approximately 24.9% of the
common shares of the Company and corresponding voting power.
SHAREHOLDER PROPOSALS
FOR 1999 ANNUAL MEETING
-----------------------
Any qualified shareholder who desires to present a proposal for
consideration at the 1999 Annual Meeting of Shareholders must
submit the proposal in writing to the Company. If the proposal
is received by the Company on or before November 6, 1998 and
otherwise meets the requirements of applicable state and federal
law, it will be included in the proxy statement and form of
proxy of the Company relating to its 1999 Annual Meeting of
Shareholders.
NOTIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
---------------------------------------------------
The Board of Directors of the Company appointed the accounting
firm of Ernst & Young LLP to serve as independent auditors of
the Company for the 1997 fiscal year.
Independent auditors for the 1998 fiscal year have not been
selected. The Board of Directors has historically appointed
independent auditors at the meeting held immediately following
the Annual Meeting and intends to do so this year.
The Board of Directors expects that representatives of Ernst &
Young LLP will be present at the Annual Meeting, will have the
opportunity to make a statement if they desire to do so, and
will be available to respond to appropriate questions.
OTHER MATTERS
-------------
As of the date of this Proxy Statement, the Board of Directors
knows of no other business to be presented for action by the
shareholders at the 1998 Annual Meeting of Shareholders other
than as set forth in this Proxy Statement. However, if any
other matter is properly presented at the Annual Meeting, or at
any adjournment(s), it is intended that the persons named in the
enclosed proxy may vote the common shares represented by such
proxy on such matters in accordance with their best judgment in
light of the conditions then prevailing.
It is important that proxies be voted and returned promptly;
therefore, shareholders who do not expect to attend the Annual
Meeting in person are urged to fill in, sign and return the
enclosed proxy in the self-addressed envelope furnished herewith.
By Order of the Board of Directors
/s/ ROBERT E. EVANS
Robert E. Evans,
President and Chief Executive Officer
March 6, 1998
ANNEX A
PEOPLES BANCORP INC.
1998 STOCK OPTION PLAN
----------------------
1. Name and Purpose. The purposes of this Plan, which shall be
known as the "Peoples Bancorp Inc. 1998 Stock Option Plan"
(hereinafter referred to as the "Plan") are to advance the
interests of Peoples Bancorp Inc. (the "Company") (i) by
providing material incentive for the continued services of those
key employees and directors of the Company and its Subsidiaries
and Consultant/Advisors to the Company and its Subsidiaries,
each of whom makes significant contributions toward the
Company's success and development, by encouraging those key
employees, directors and Consultant/Advisors to increase their
proprietary interest in the Company; and (ii) by attracting new
able executives to employment with the Company and its
Subsidiaries or to serve as directors of the Company or of one
or more of its Subsidiaries.
2. Definitions. For purposes of this Plan, the following terms
when capitalized shall have the meanings designated herein
unless a different meaning is plainly required by the context.
Where applicable, the masculine pronoun shall mean or include
the feminine and the singular shall include the plural.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Cause" shall mean that an act of (i) fraud or intentional
misrepresentation or (ii) embezzlement, misappropriation or
conversion of assets or opportunities of the Company or any
Subsidiary, has occurred.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended, and the regulations and rulings thereunder. References
to a particular section of the Code shall include references to
successor provisions.
(d) "Committee" shall mean the committee which administers the
Plan, whose membership shall be determined under Subsection 3(a)
below.
(e) "Common Shares" shall mean the common shares of Peoples
Bancorp Inc.
(f) "Company" shall mean Peoples Bancorp Inc.
(g) "Consultant/Advisor" shall mean any consultant or advisor
who renders bona fide services to the Company and/or one or more
of the Subsidiaries and who is neither an employee nor a
director of the Company or any Subsidiary.
(h) "Effective Date" shall mean the date on which this Plan
shall become effective, as provided in Section 15 below.
(i) "Employee Director" shall mean a director of the Company
who is also an employee of the Company.
(j) The "Fair Market Value" of a Common Share on any relevant
date for purposes of any provision of this Plan shall mean the
last reported sales price of a Common Share of the Company on
The Nasdaq National Market or on any securities exchange on
which the Common Shares may be listed on such date or, if there
are no reported sales on such date, then the last reported sales
price on the next preceding day on which such a sale was
transacted.
(k) "Incentive Option" shall mean an Option granted under this
Plan which is an incentive stock option under the provisions of
Section 422 of the Code; and any provisions elsewhere in this
Plan or in any such Incentive Option which would prevent such
Option from being an incentive stock option may be deleted
and/or voided retroactively to the date of the granting of such
option, by action of the Committee; and the Committee may
retroactively add provisions to this Plan or to any Incentive
Option if necessary to qualify such Option as an incentive stock
option.
(l) "Key Employee" shall mean any employee of the Company
and/or one of the Subsidiaries (as defined in Subsection 2(r)
below) who in the opinion of the Committee has demonstrated a
capacity for contributing in a substantial measure to the
success of the Company and its Subsidiaries.
(m) "Non-employee Director" shall mean a director of the
Company who is not also an employee of the Company or of one of
the Subsidiaries.
(n) "Non-qualified Option" shall mean an Option granted under
this Plan which is not an Incentive Option. Such Non-qualified
Option shall not be affected by any actions taken retroactively
as provided in Subsection 2(k) above with respect to Incentive
Options.
(o) "Participant" shall mean (i) a Key Employee selected by
the Committee (under Subsection 3(b) below) to receive Options
granted under this Plan; (ii) a Subsidiary Director selected by
the Committee (under Subsection 3(b) below) to receive
Non-qualified Options granted under this Plan; (iii) a
Consultant/Advisor selected by the Committee (under Subsection
3(b) below) to receive Non-qualified Options granted under this
Plan; and (iv) a Non-employee Director receiving Non-qualified
Options pursuant to Subsection 5(j) below.
(p) "Option" shall mean an option granted under this Plan,
whether such option is an Incentive Option or a Non-qualified
Option.
(q) "Plan" shall mean the Peoples Bancorp Inc. 1998 Stock
Option Plan.
(r) "Subsidiary" shall mean a corporation which is a
subsidiary corporation of the Company as that term is defined in
Subsection 424(f) of the Code.
(s) "Subsidiary Board" shall mean the board of directors of a
Subsidiary.
(t) "Subsidiary Director" shall mean a director of one or more
of the Subsidiaries of the Company who is neither a director of
the Company nor an employee of the Company or of any of the
Subsidiaries.
3. Administration: Selection of Participants.
(a) The Plan shall be administered by the Committee which
shall consist of three or more members of the Board appointed by
the Board from time to time and serving at the pleasure of the
Board.
(b) The Committee shall select the Key Employees who are to
receive Options and shall grant to such Key Employees Options
under, and in accordance with, the provisions of the Plan. The
Committee shall also select the Subsidiary Directors and the
Consultant/Advisors who are to receive Non-qualified Options and
shall grant to such persons Non-qualified Options under, and in
accordance with, the provisions of the Plan. The Non-employee
Directors shall receive non-discretionary Non-qualified Options
in accordance with Subsection 5(j) below.
(c) Subject to the express provisions of this Plan, the
Committee shall have authority to adopt administrative
regulations and procedures which are consistent with the terms
of this Plan; to adopt and amend such option agreements as it
deems advisable; to determine the terms and provisions of such
option agreements (including, but not limited to, provisions
addressing the form of Options (Incentive Options and/or
Non-qualified Options) granted to Key Employees, the number of
Common Shares covered by each Option granted to a Key Employee,
the option price for each Option granted to a Key Employee, the
date or dates when each Option granted to a Key Employee (or
parts of it) may be exercised (including the effect of
termination of employment prior to the exercise of an Option in
full), the number of Common Shares covered by each Option
granted to a Subsidiary Director or to a Consultant/Advisor, the
option price for each Non-qualified Option granted to a
Subsidiary Director or to a Consultant/Advisor and the date or
dates when each Non-qualified Option granted to a Subsidiary
Director or to a Consultant/Advisor (or parts of it) may be
exercised) -- which terms shall comply with the requirements of
Section 5 below; to construe and interpret the provisions of
option agreements entered into pursuant to this Plan; to impose
such limitations and restrictions as are deemed necessary or
advisable by counsel for the Company so that compliance with the
federal securities laws and with the securities laws of the
various states may be assured; and to make all other
determinations necessary or advisable for administering this
Plan. Decisions by the Committee may be made either by a
majority of its members at a meeting of the Committee duly
called and held or without a meeting by a writing signed by all
of the members of the Committee. All decisions and
interpretations made by the Committee shall be binding and
conclusive on all Participants, their legal representatives and
beneficiaries.
(d) At least once each calendar year, the Committee shall
report to the Board describing the action which it has taken in
administering the Plan and making such recommendations for
amendments or otherwise as it may deem necessary.
(e) The Committee may designate any officers or employees of
the Company or the Subsidiaries to assist the Committee in the
administration of this Plan but the Committee may not delegate
to them duties imposed on the Committee under this Plan with
respect to Options which may be and are granted to Participants
who are subject to Section 16 of the Securities Exchange Act of
1934, as amended.
4. Shares Subject to the Plan.
(a) The shares to be issued and delivered by the Company upon
exercise of Options granted under this Plan are Common Shares
which may be either authorized but unissued shares or treasury
shares, in the discretion of the Committee.
(b) The aggregate number of Common Shares which may be issued
under this Plan shall not exceed 100,000 Common Shares; subject,
however, to the adjustment provided in Section 10 of this Plan
in the event of stock splits, stock dividends, combinations or
exchanges of shares or other similar capital adjustments
occurring after the Effective Date. If any outstanding Option
under the Plan for any reason expires or is terminated without
having been exercised in full, the Common Shares allocable to
the unexercised portion of such Option shall (unless the Plan
shall have been terminated) become available for subsequent
grants of Options under the Plan. No Option may be granted
under this Plan which could cause the maximum limit to be
exceeded.
(c) Of the 100,000 Common Shares which may be issued under the
Plan, an aggregate of 30,000 Common Shares shall be issuable to
Non-employee Directors, Subsidiary Directors and
Consultant/Advisors upon the exercise of Non-qualified Options
to be granted to them under the terms of the Plan and an
aggregate of 70,000 Common Shares shall be issuable to Key
Employees upon the exercise of Options to be granted to them
under the terms of the Plan; provided, however, that if
Non-qualified Options covering an aggregate of 30,000 Common
Shares have not been granted to Non-employee Directors,
Subsidiary Directors and Consultant/Advisors on or before the
date of the 2002 Annual Meeting, that portion of the 30,000
Common Shares not covered by Non-qualified Options so granted
may be the subject of Options to be granted to Key Employees
under the terms of the Plan.
(d) During the period in which this Plan remains in effect, no
Key Employee may be granted Options covering, in the aggregate,
more than 25,000 Common Shares (subject to adjustment as
provided in Section 10 of this Plan).
5. Terms of Options. Options granted under this Plan shall
contain such terms as the Committee determines subject to the
following limitations and requirements:
(a) Option price: Subject to the limitations of Subsection
5(h) below, the option price per Common Share of each Incentive
Option and each Non-qualified Option granted under the Plan
shall be not less than 100% of the Fair Market Value of the
Company's Common Shares on the date of the grant of the related
option.
(b) Period within which Options may be exercised: Subject to
the limitations of Subsections 5(c), 5(h), 5(j) and 5(k) below,
each Incentive Option and each Non-qualified Option granted
under this Plan to a Key Employee shall have a term of not more
than ten years, each Non-qualified Option granted under this
Plan to a Subsidiary Director or to a Consultant/Advisor shall
have a term of not more than ten years and each Non-qualified
Option granted under this Plan to a Non-employee Director shall
have a term of ten years.
(c) Termination of Options granted to Key Employees by reason
of termination of employment:
(i) Incentive Options. If a Participant's employment with the
Company and the Subsidiaries terminates for any reason other
than (A) the death of the Participant, (B) the disability of
the Participant within the meaning of Section 22(e)(3) of the
Code,(C) the retirement of the Participant under the provisions
of any retirement plan of the Company or any Subsidiary, or
(D)any reason (other than for Cause) after the Participant has
been employed by the Company and/or one or more Subsidiaries
for at least 10 consecutive years prior to the Participant's
termination of employment, the portion of all Incentive
Options granted under this Plan to such Participant which are
not then exercisable under Subsection 5(i) of this Plan on
the date of termination of employment, shall terminate
effective immediately upon termination of employment. If the
termination of employment of the Participant was due to
retirement under the provisions of any retirement plan of the
Company or any Subsidiary or if the termination of employment
was due to a reason other than for Cause and the Participant
had been employed by the Company and/or one or more
Subsidiaries for at least 10 consecutive years prior to the
Participant's termination of employment, all of such
Participant's Incentive Options may be exercised in full,
whether or not then exercisable under Subsection 5(i) of this
Plan, and the right of the Participant to exercise the
Incentive Options shall terminate upon the earlier to occur
of the expiration of the term of such
Incentive Options or three months after the date of
termination of employment. If the termination of employment
was due to the death of a Participant who was an employee of
the Company and/or any Subsidiary at the time of his death,
such Incentive Options may be exercised in full, whether or
not then exercisable under Subsection 5(i) of this Plan, and
the right of the representative or representatives of the
Participant's estate (or the person or persons who acquire
(by bequest or inheritance) the right to exercise the
Participant's Incentive Options) to exercise the Incentive
Options shall terminate upon the earlier to occur of the
expiration of the term of such Incentive Options or one year
after the date of death of the Participant. If the
termination of employment was due to the disability of the
Participant within the meaning of Section 22(e)(3) of the
Code, such Incentive Options may be exercised in full,
whether or not then exercisable under Subsection 5(i) of
this Plan, and the right of the Participant to exercise the
Incentive Options shall terminate upon the earlier to occur
of the expiration of the term of such Incentive Options or
one year after the date of termination of employment. If the
termination of employment of the Participant was due to
reasons other than for Cause and the Participant had not been
employed by the Company and/or one or more Subsidiaries for
at least 10 consecutive years prior to the Participant's
termination of employment, the Participant's Incentive
Options may be exercised only to the extent then exercisable
under Subsection 5(i) of this Plan on the date of termination
of employment, and the right of the Participant to exercise
the Incentive Options shall terminate upon the earlier to
occur of the expiration of the term of such Incentive Options
or three months after the date of termination of employment.
If the termination of employment of the Participant was for
Cause, all Incentive Options which have not been exercised
as of the date of termination of employment shall terminate
immediately as of the date of termination of employment.
(ii) Non-qualified Options. Non-qualified Options granted to
Key Employees under the Plan shall be exercisable following
termination of employment for such period of time and under
such conditions as the Committee may impose at the time of
grant of such Non-qualified Options. If, however, the
Committee does not specify another exercisability schedule in
the event of termination of employment, the provisions
outlined in the following paragraph of this Subsection 5(c)
(ii) shall be applicable.
Default schedule of exercisability upon termination of
employment. If a Participant's employment with the Company
and the Subsidiaries terminates for any reason other than (A)
the death of the Participant, (B) the disability of the
Participant within the meaning of Section 22(e)(3) of the
Code, (C) the retirement of the Participant under the
provisions of any retirement plan of the Company or any
Subsidiary, or (D) any reason (other than for Cause) after
the Participant has been employed by the Company and/or one
or more Subsidiaries for at least 10 consecutive years prior
to the Participant's termination of employment, the portion
of all Non-qualified Options granted under the Plan to such
Participant which are not then exercisable under Subsection
5(i) of this Plan on the date of termination of employment,
shall terminate effective immediately upon termination of
employment. If the termination of employment of the
Participant was due to retirement under the provisions of any
retirement plan of the Company or any Subsidiary or if the
termination of employment was due to a reason other than for
Cause and the Participant had been employed by the Company
and/or one or more Subsidiaries for at least 10 consecutive
years prior to the Participant's termination of employment,
all of such Participant's Non-qualified Options may be
exercised in full, whether or not then exercisable under
Subsection 5(i) of this Plan, and the right of the Participant
(or the representative of the Participant's estate) to
exercise the Non-qualified Options shall terminate upon the
earlier to occur of the expiration of the term of such
Non-qualified Options or two years following the date of
death of the Participant. If the termination of employment
was due to the death of a Participant who was an employee of
the Company and/or any Subsidiary at the time of his death,
such Non-qualified Options may be exercised in full, whether
or not then exercisable under Subsection 5(i) of this Plan,
and the right of the representative or representatives of
the Participant's estate (or the person or persons who
acquire (by bequest or inheritance) the right to exercise the
Participant's Non-qualified Options) to exercise the
Non-qualified Options shall terminate upon the earlier to
occur of the expiration of the term of such Non-qualified
Options or two years after the date of death of the
Participant. If the termination of employment was due to the
disability of the Participant within the meaning of Section
22(e)(3) of the Code, such Non-qualified Options may be
exercised in full, whether or not then exercisable under
Subsection 5(i) of this Plan, and the right of the
Participant (or the representative of the Participant's
estate) to exercise the Non-qualified Options shall terminate
upon the earlier to occur of the expiration of the term of
such Non-qualified Options or two years following the date
of death of the Participant. If the termination of employment
of the Participant was due to reasons other than for Cause
and the Participant had not been employed by the Company
and/or one or more of the Subsidiaries for at least 10
consecutive years prior to the Participant's termination of
employment, the Participant's Non-qualified Options may be
exercised only to the extent then exercisable under
Subsection 5(i) of this Plan on the date of termination of
employment, and the right of the Participant (or the
representative of the Participant's estate) to exercise the
Non-qualified Options shall terminate upon the earlier to
occur of the expiration of the term of such Non-qualified
Options or two years following the date of death. If the
termination of employment of the Participant was for Cause,
all Non-qualified Options which have not been exercised as of
the date of termination of employment shall terminate
immediately as of the date of termination of employment.
(d) Assignability: With the permission of the Committee, a
Participant who has been granted a Non-qualified Option under
the Plan may transfer such Non-qualified Option to a revocable
inter vivos trust as to which the Participant is the settlor or
may transfer such Non-qualified Option to a "Permissible
Transferee." A Permissible Transferee shall be defined as any
member of the immediate family of the Participant, any trust,
whether revocable or irrevocable, solely for the benefit of
members of the Participant's immediate family, or any
partnership whose only partners are members of the Participant's
immediate family. Any such transferee of a Non-qualified Option
shall remain subject to all of the terms and conditions
applicable to such Non-qualified Option and subject to the rules
and regulations prescribed by the Committee. A Non-qualified
Option may not be retransferred by a Permissible Transferee
except by will or the laws of descent and distribution and then
only to another Permissible Transferee. Other than described
above, an Option granted under the Plan may not be transferred
except by will or the laws of descent and distribution and,
during the lifetime of a Participant to whom granted, may be
exercised only by him, his guardian or legal representative.
(e) More than one Option granted to a Participant: More than
one Option (and, in the case of a Key Employee, more than one
form of Option) may be granted to a Participant under this Plan.
(f) Aggregate annual limit on Incentive Options: The
aggregate Fair Market Value (determined at the time of the grant
of the Option) of the Common Shares with respect to which
Incentive Options are first exercisable by any Key Employee in
any calendar year under this Plan and any other plans of the
Company and the Subsidiaries shall not exceed $100,000. To the
extent that the aggregate Fair Market Value of Common Shares
with respect to which Incentive Options are exercisable for the
first time by a Participant during any calendar year (under all
plans of the Company and the Subsidiaries) exceeds $100,000,
such Options shall be treated as Non-qualified Options, to the
extent required by Section 422 of the Code.
(g) Partial exercise: Unless otherwise provided in the
applicable option agreement, any exercise of an Option granted
under this Plan may be made in whole or in part.
(h) 10% Shareholder: If a Participant owns (including
constructive ownership pursuant to Section 424(d) of the Code)
more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any of the
Subsidiaries, then each Incentive Option granted under this Plan
to such Participant shall by its terms fix the option price per
Common Share to be at least 110% of the Fair Market Value of the
Common Shares on the date of the grant of such Incentive Option
and such Incentive Option shall terminate (become
non-exercisable) after the expiration of five years from the
date of the grant of such Incentive Option.
(i) Exercisability: Options awarded to Key Employees,
Subsidiary Directors and Consultant/Advisors under the Plan
shall be exercisable at such times and shall be subject to such
restrictions and conditions, including the performance of a
minimum period of service, as the Committee may impose at the
time of grant of such Options; provided, however, that if the
Committee does not specify another vesting schedule at the time
of grant, each Option granted to a Key Employee shall become
exercisable as follows: (i) with respect to 25% of the Common
Shares covered thereby after 24 months of continuous employment
by the Company and/or one or more Subsidiaries; (ii) with
respect to an additional 25% of the Common Shares covered
thereby after 36 months of continuous employment by the Company
and/or one or more Subsidiaries; (iii) with respect to an
additional 25% of the Common Shares covered thereby after 48
months of continuous employment by the Company and/or one or
more Subsidiaries; and (iv) with respect to an additional 25% of
the Common Shares covered thereby after 60 months of continuous
employment by the Company and/or one or more Subsidiaries. If a
Key Employee, a Subsidiary Director or a Consultant/Advisor does
not purchase in any one year the full number of Common Shares
which may be purchased with his then exercisable Options, such
Key Employee, Subsidiary Director or Consultant/Advisor, as
appropriate, may purchase those Common Shares in any subsequent
year during the term of the Options.
(j) Non-employee Directors: Each Non-employee Director then
serving on the Board and who has served on the Board and/or a
Subsidiary Board for all or a portion of at least the five
calendar years immediately preceding the January 1 immediately
prior to the date of grant, shall automatically be granted a
Non-qualified Option for 750 Common Shares effective on the date
on which the annual meeting of the Company's shareholders is
held in 1998 in accordance with the Regulations of the Company
(the "1998 Annual Meeting") and for 750 Common Shares effective
on the date on which the annual meeting of the Company's
shareholders is held in 2000 in accordance with the Regulations
of the Company (the "2000 Annual Meeting"). Each Non-Employee
Director then serving on the Board and who has served on the
Board and/or a Subsidiary Board for fewer than the five calendar
years (including all or any portion of any such year)
immediately preceding the January 1 immediately prior to the
date of grant, shall automatically be granted a Non-qualified
Option for 150 Common Shares plus 150 Common Shares for all or
any portion of each calendar year preceding the date of grant
during which such Non-Employee Director has served on the Board
and/or a Subsidiary Board as of such January 1 effective on the
date of each of the 1998 Annual Meeting and the 2000 Annual
Meeting. Any individual who was not a member of the Board on
the date of the 1998 Annual Meeting, (i) who is subsequently
appointed or elected to the Board at least six months prior to
the date on which the annual meeting of the Company's
shareholders is to be held in 1999 in accordance with the
Regulations of the Company (the "1999 Annual Meeting") shall
automatically be granted a Non-qualified Option on the date of
such appointment or election for the same number of Common
Shares as such individual would have received if he had been a
member of the Board on the date of the 1998 Annual Meeting; (ii)
who is subsequently appointed or elected to the Board less than
six months prior to the date of the 1999 Annual Meeting but
prior to such 1999 Annual Meeting shall automatically be granted
a Non-qualified Option on the date of such appointment or
election for 75% of the number of Common Shares which such
individual would have received if he had been a member of the
Board on the date of the 1998 Annual Meeting; (iii) who is
subsequently appointed or elected to the Board on or after the
date of the 1998 Annual Meeting but at least six months prior to
the date of the 2000 Annual Meeting shall automatically be
granted a Non-qualified Option on the date of such appointment
or election for 50% of the number of Common Shares which such
individual would have received if he had been a member of the
Board on the date of the 1998 Annual Meeting; and (iv) who is
subsequently appointed or elected to the Board less than six
months prior to the 2000 Annual Meeting but prior to such 2000
Annual Meeting shall automatically be granted a Non-qualified
Option on the date of such appointment or election for 25% of
the Common Shares which such individual would have received if
he had been a member of the Board on the date of the 1998 Annual
Meeting. Any individual who was not a member of the Board on
the date of the 2000 Annual Meeting and who is subsequently
appointed or elected to the Board prior to the date on which the
annual meeting of the Company's shareholders is to be held in
2002 in accordance with the Regulations of the Company (the
"2002 Annual Meeting") shall automatically be granted a
Non-qualified Option on the same basis as described in the
immediately preceding sentence. Notwithstanding anything to the
contrary in this Section 5(j), any individual who was serving as
a Subsidiary Director and is subsequently appointed or elected
as a Non-employee Director after the date of the 1998 Annual
Meeting but prior to the date of the 2000 Annual Meeting, or
after the date of the 2000 Annual Meeting but prior to the date
of the 2002 Annual Meeting, as the case may be, and who is to be
granted a Non-qualified Option pursuant to either of the two
immediately preceding sentences, shall have deducted from the
number of Common Shares to be covered by the Non-qualified
Option granted to him under this Subsection 5(j), the number of
Common Shares covered by any Non-qualified Option which he
previously received pursuant to this Plan.
Each Non-qualified Option granted to a Non-employee Director
shall have an exercise price equal to 100% of the Fair Market
Value of the Common Shares on the date of the grant of such
Non-qualified Option and a term of ten years.
If a Non-employee Director does not purchase in any one year
the full number of Common Shares which may be purchased with his
then exercisable Non-qualified Options, such Non-employee
Director may purchase those Common Shares in any subsequent year
during the term of the Non-qualified Options.
If a Non-employee Director ceases to be a director of the
Company for any reason other than his death or for Cause, the
Non-qualified Options granted to him under this Plan may be
exercised in full, whether or not then exercisable by their
terms, on or before the expiration of the term of the
Non-qualified Options; provided, however, that if the former
Non-employee Director shall die prior to the expiration of the
term of the Non-qualified Options, such Non-qualified Options
may only be exercised on or before the earlier of the expiration
of such term or two years following the date of death. If a
Non-employee Director ceases to be a director of the Company
because of his death, such Non-qualified Options may be
exercised in full, whether or not then exercisable by their
terms, only on or before the earlier of the expiration of the
term of the Non-qualified Options or two years following the
date of death. If a Non-employee Director ceases to be a
director of the Company and/or any Subsidiary for Cause, all of
his then unexercised Non-qualified Options shall immediately
terminate.
Non-employee Directors shall not be eligible to receive any
Options under the Plan other than pursuant to this Subsection
5(j).
(k) Termination of Non-qualified Options granted to Subsidiary
Directors by reason of termination of director status:
Non-qualified Options granted to Subsidiary Directors under the
Plan shall be exercisable after a Subsidiary Director ceases to
be a director of a Subsidiary and/or the Company for such period
of time and under such conditions as the Committee may impose at
the time of grant of such Non-qualified Options. If, however,
the Committee does not specify another exercisability schedule
in the event of termination of director status, the provisions
outlined in the following paragraph of this Subsection 5(k)
shall be applicable.
Default schedule of exercisability upon termination of
director status. If a Subsidiary Director ceases to be a
director of a Subsidiary and/or the Company for any reason other
than his death or for Cause, the Non-qualified Options granted
to him under this Plan may be exercised in full, whether or not
then exercisable by their terms, on or before the expiration of
the term of the Non-qualified Options; provided, however, that
if the former Subsidiary Director shall die prior to the
expiration of the term of the Non-qualified Options, such
Non-qualified Options may be exercised only on or before the
earlier of the expiration of such term or two years following
the date of death. If a Subsidiary Director ceases to be a
director of a Subsidiary and/or the Company because of his
death, such Non-qualified Options may be exercised in full,
whether or not then exercisable by their terms, only on or
before the earlier of the expiration of the term of the
Non-qualified Options or two years following the date of death.
If a Subsidiary Director ceases to be a director of a Subsidiary
and/or the Company for Cause, all of his then unexercised
Non-qualified Options shall immediately terminate.
6. Period For Granting Options. No Options shall be granted
under this Plan subsequent to the tenth anniversary of the
earlier of (a) the day prior to the date on which this Plan is
adopted by the Board or (b) the day prior to the date on which
this Plan is approved by the affirmative vote of the holders of
a majority of the outstanding shares of the Company.
7. No Effect Upon Employment Status. The fact that an employee
has been designated a Key Employee or selected as a Participant
shall not limit or otherwise qualify the right of his employer
to terminate his employment at any time.
8. Method of Exercise. An Option granted under this Plan may
be exercised only by written notice to the Committee, signed by
the Participant (or, in the case of Non-qualified Options, any
Permitted Transferee), or in the event of his death, by such
other person as is entitled to exercise such option. The notice
of exercise shall state the number of Common Shares in respect
of which the Option is being exercised, and shall either be
accompanied by the payment of the full option price of such
Common Shares, or shall fix a date (not more than 10 business
days from the date of such notice) for the payment of the full
option price of the Common Shares being purchased. The option
price shall be payable in cash or by tendering Common Shares (by
either actual delivery of Common Shares or by attestation, with
such Common Shares valued at Fair Market Value as of the date of
exercise), or in any combination thereof as determined by the
Committee. The Committee may permit a Participant to elect to
pay the option exercise price upon the exercise of an Option by
authorizing a third party to sell Common Shares (or a sufficient
portion of the Common Shares) acquired upon exercise of the
option and remit to the Company a sufficient portion of the sale
proceeds to pay the entire option exercise price and any tax
withholding resulting from such exercise.
Whenever the Company proposes or is required to distribute
Common Shares under the Plan upon exercise of an Option, the
Company may require the person exercising the Option to remit to
the Company an amount sufficient to satisfy any federal, state
and local tax withholding requirements prior to the delivery of
any certificate for such Common Shares or, in the discretion of
the Committee, the Company may withhold from the Common Shares
to be delivered Common Shares sufficient to satisfy all or a
portion of the tax withholding requirements.
During the option period, no person entitled to exercise any
Option granted under this Plan shall have any of the rights or
privileges of a shareholder with respect to any Common Shares
issuable upon exercise of such Option until the books of the
Company evidence that such person has become the record owner of
such Common Shares.
9. Implied Consent of Participants. Every Participant, by his
acceptance of an Option under this Plan, shall be deemed to have
consented to be bound, on his own behalf and on behalf of his
heirs, permitted assigns and legal representatives, by all of
the terms and conditions of this Plan.
10. Share Adjustments. In the event there is any change in the
Common Shares resulting from stock splits, stock dividends,
combinations or exchanges of shares, or other similar capital
adjustments, equitable proportionate adjustments shall be made
by the Committee in (a) the number of Common Shares available
for the grant of Options under this Plan, (b) the number of
Common Shares subject to Options granted under this Plan, and
(c) the exercise price of outstanding Options.
11. Merger, Consolidation or Sale of Assets. In the event the
Company shall consolidate with, merge into, or transfer all or
substantially all of its assets (an "Acquisition Transaction")
to, another corporation or corporations (herein referred to as
"successor employer corporation"), then each Incentive Option
and each Non-Qualified Option outstanding under the Plan shall
become exercisable in full, whether or not then exercisable by
its terms, immediately upon consummation of the Acquisition
Transaction. As a condition of any such Acquisition
Transaction, the Company shall require that the successor
employer corporation obligate itself to continue this Plan and
to assume all obligations under the Plan in a manner consistent
with the provisions of Section 424(a) of the Code. In the event
that such successor employer corporation terminates for any
reason the employment of any Participant who is a Key Employee
within the one-year period immediately following the
consummation of the Acquisition Transaction, such Participant
shall have the right to exercise his then unexercised Options
during the period ending on the earlier of the expiration of the
term of the Options or three months following the date of the
Participant's termination of employment.
12. Company Responsibility. All expenses of this Plan,
including the cost of maintaining records, shall be borne by the
Company. The Company shall have no responsibility or liability
(other than under applicable securities laws) for any act or
thing done or left undone with respect to the price, time,
quantity or other conditions and circumstances of the purchase
of Common Shares under the terms of the Plan, so long as the
Company acts in good faith.
13. Securities Laws. The Committee shall take all necessary or
appropriate action to ensure that all grants of Options and all
exercises thereof under this Plan are in full compliance with
all federal and state securities laws. No Option granted under
this Plan shall be exercised before the Common Shares subject to
the Plan have been registered or qualified for sale under
appropriate federal and state securities laws.
14. Amendment and Termination of the Plan. The Committee, with
the approval of the Board, may amend the Plan from time to time
or terminate the Plan at any time without the approval of the
shareholders of the Company except as such shareholder approval
may be required (a) to satisfy the requirements of Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as
amended, or any successor provision, (b) to satisfy applicable
requirements of the Code or (c) to satisfy applicable
requirements of any securities exchange on which are listed any
of the Company's equity securities or any requirements
applicable to issuers whose securities are traded in The Nasdaq
National Market. No such action to amend or terminate the Plan
shall reduce the then existing number of any Participant's
Options or adversely change the term or conditions thereof
without the Participant's consent. If the Plan is terminated,
any unexercised Option shall continue to be exercisable in
accordance with its terms.
15. Effective Date. The Plan was adopted by the Board on
February 12, 1998. The Plan shall become effective as of the
date it is approved by the affirmative vote of the holders of a
majority of the outstanding shares of the Company. The Plan
shall be null and void if shareholder approval is not obtained
within twelve (12) months of the adoption of the Plan by the
Board.
PEOPLES BANCORP INC.
1998 STOCK OPTION PLAN
ANNEX B
PEOPLES BANCORP INC.
DEFERRED COMPENSATION PLAN FOR DIRECTORS
OF
PEOPLES BANCORP INC. AND SUBSIDIARIES
-------------------------------------
Section 1. PURPOSE - The Corporation desires and intends to
recognize the value to the Corporation and its Affiliates of the
past and present services of the Directors of the Corporation
and its Affiliates, to encourage their continued service to the
Corporation and its Affiliates and to be able to attract and
retain superior Directors by adopting and implementing this Plan
to provide such Directors an opportunity to defer compensation
otherwise payable to them from the Corporation and/or Affiliate.
This Plan is an amendment and restatement of the Peoples
Bancorp Inc. Deferred Compensation Plan for Directors of Peoples
Bancorp Inc. and Subsidiaries which was originally effective as
of January 1, 1991, and its provisions shall apply to all
Directors who provide services to the Corporation or an
Affiliate on or after the Effective Date.
Section 2. CERTAIN DEFINITIONS - The following terms will have
the meanings provided below.
"Additions" means the credits applied to Deferred Compensation
Accounts as provided in Section 4 hereof.
"Adjustment Date" means the first business day of each calendar
quarter.
"Affiliate" means any organization or entity which, together
with the Corporation, is a member of a controlled group of
corporations or of a commonly controlled group of trades or
businesses [as defined in Sections 414(b) and (c) of the Code],
or of an affiliated service group [as defined in Code Section
414(m)] or other organization described in Code Section 414(o).
"Annual Retainer" means, with respect to any calendar year or
other period, the fixed retainer which, absent an election to
defer hereunder, would be payable to a Participant during those
pay periods beginning in the given calendar year or other period.
"Beneficiary" means the person or persons designated in writing
as such and filed with the Plan Administrator at any time by a
Participant. For this purpose, a "Beneficiary" may be
designated contingently or successively and may be an entity
other than a natural person. Any such designation may be
withdrawn or changed in writing (without the consent of the
Beneficiary), but only the last designation on file with the
Plan Administrator shall be effective.
"Board" means the Board of Directors of the Corporation.
"Code" means the Internal Revenue Code of 1986, as may be
amended from time to time.
"Common Shares" means the common shares of the Corporation.
"Corporation" means Peoples Bancorp Inc. and any successor
entity.
"Deferred Compensation Account" means the separate Deferred
Compensation Account established for each Participant pursuant
to Section 4 of the Plan.
"Director" means any statutory Director, emeritus Director or
honorary Director of the Corporation or any Affiliate.
"Effective Date" means, for this amended and restated Plan,
January 2, 1998.
"Eligible Compensation" means, to the extent applicable to any
given Participant, the Annual Retainer and all Meeting Fees.
The extent to which a given Participant may defer a given
component of Eligible Compensation shall be based upon such
Participant's eligibility to receive the given component of
Eligible Compensation (as determined under applicable agreements
and pay practices of the Corporation or applicable Affiliate)
and the provisions and limitations applicable to the given
component as provided under this Plan.
"Fair Market Value" of the Common Shares means the most recent
closing price of the Common Shares on any securities exchange on
which the Common Shares are then listed.
"Meeting Fees" means, with respect to any calendar year or
other period, the fees for attendance at meetings of the Board
of Directors of the Corporation or applicable Affiliate or any
committees thereof (exclusive of expenses) which, absent an
election to defer hereunder, would be payable to a Participant
during those pay periods beginning in the given calendar year or
other period.
"Participant" has the meaning specified in Section 3 of the
Plan.
"Plan" means the Peoples Bancorp Inc. Deferred Compensation
Plan for Directors of Peoples Bancorp Inc. and Subsidiaries, as
reflected in this document, as the same may be amended from time
to time after the Effective Date.
"Plan Administrator" means the Corporation. The functions of
the Plan Administrator shall be carried out by a committee of
three (3) Directors appointed by the Board and by the employee
or employees designated by such committee to carry out certain
specific functions.
"Plan Year" means the calendar year.
Section 3. PARTICIPANTS
Each Director who is participating in the Plan as of the
Effective Date shall continue as a Participant in the Plan as of
such date. Each Director who first becomes a Director after the
Effective Date shall be eligible for participation in the Plan
as of the date on which he becomes a Director. A Director who
is eligible for participation in the Plan and who elects to make
deferral contributions pursuant to Section 4 shall be designated
a "Participant" in the Plan. A Participant shall continue to
participate in the Plan until his status as a Participant is
terminated by either a complete distribution of his Deferred
Compensation Account pursuant to the terms of the Plan or by
written directive of the Corporation.
Section 4. DEFERRED COMPENSATION ACCOUNTS
A. Establishment of Deferred Compensation Accounts. The Plan
Administrator will establish a Deferred Compensation Account for
each Participant. A Participant's Deferred Compensation Account
shall have two subaccounts; a Cash Account to record amounts
allocated under Section 4.D.(ii) and a Stock Account to record
amounts allocated under Section 4.D.(iii). Such Deferred
Compensation Account shall be a bookkeeping account only,
maintained as part of the books and records of the Corporation
or applicable Affiliate.
B. Election of Participant. With respect to each Plan Year, a
Participant may elect to have a percentage or a flat dollar
amount of his Eligible Compensation which is to be paid to him
by the Corporation or applicable Affiliate for the Plan Year in
question allocated to his Deferred Compensation Account and paid
on a deferred basis pursuant to the terms of the Plan. To
exercise such an election for any Plan Year, before the December
31st preceding the Plan Year, the Participant must advise the
Plan Administrator of his election, in writing, on a form
prescribed by the Plan Administrator and filed with the
Secretary of the Corporation (each, a "Deferral Notice").
Notwithstanding the preceding sentence, in the case of a
Director who first becomes eligible to participate in the Plan
after a Plan Year has commenced, the Participant may complete a
Deferral Notice at any time prior to the date on which he is
first eligible to participate in the Plan. Such Deferral Notice
shall apply only to Eligible Compensation payable to, or earned
by, the Participant after the date on which the Deferral Notice
is received by the Plan Administrator. To the extent that a
Participant completes a Deferral Notice in accordance with the
provisions of this paragraph, such Deferral Notice shall remain
in effect for future Plan Years until changed or revoked by the
Participant. A Participant may terminate his election to defer
payment of Eligible Compensation by written notice delivered to
the Corporation's Secretary. Such termination shall become
effective as of the end of the Plan Year in which notice of
termination is given with respect to Eligible Compensation
payable for services as a Director during subsequent Plan Years.
Amounts credited to the Deferred Compensation Account of the
Participant prior to the effective date of termination shall not
be affected thereby and shall be paid only in accordance with
Section 5.
C. Corporation Contributions. Each time a Deferral Notice is
submitted to the Plan Administrator in accordance with Section
4.B. above, during the next Plan Year (or, if applicable, the
remaining Plan Year), the Corporation or applicable Affiliate
will allocate to the Participant's Deferred Compensation Account
the percentage or dollar amount of Eligible Compensation,
specified in the Deferral Notice. Any amounts so allocated by
the Corporation or Affiliate are called "Corporation
Contributions."
D. Adjustment of Account Balances.
(i) Participant Election. At the time that a Participant
submits a Deferral Notice, he shall elect the percentage of
Corporation Contributions to be allocated to his Cash Account
(to be adjusted pursuant to Paragraph (ii) of this Section 4.D.)
and his Stock Account (to be adjusted pursuant to Paragraph
(iii) of this Section 4.D.). In addition, within a reasonable
time following the Effective Date, each Participant who has a
Deferred Compensation Account balance as of the Effective Date,
shall be afforded an election under this Paragraph (i) with
respect to such balance. Any election made pursuant to this
Paragraph (i) shall be irrevocable with respect to the affected
Corporation Contributions and Deferred Compensation Account
balance.
(ii) As of each Adjustment Date, the Plan Administrator shall
credit the balance in the Participant's Cash Account with
Additions which shall either (A) mirror a specific interest rate
equal to the rate of return paid by Peoples Banking & Trust
Company on a Three (3) Year certificate of deposit or an
equivalent deposit account as of the last business day preceding
the applicable Adjustment Date; or (B) to the extent that a
certificate of deposit is purchased by a trust established to
provide benefits under the Plan, be equal to the actual rate of
interest paid with respect to such certificate of deposit. The
crediting of Additions shall be determined by multiplying the
Participant's Cash Account balance as of each month of the
quarter preceding the Adjustment Date by the applicable rate of
interest determined under the preceding sentence. The crediting
of Additions shall occur so long as there is a balance in the
Participant's Cash Account regardless of whether the Participant
has terminated service as a Director or has died. The Plan
Administrator may prescribe any reasonable method or procedure
for the accounting of Additions.
(iii) As of each Adjustment Date (or such later date on which
Common Shares are actually acquired), the amount credited to the
Stock Account of each Participant shall be divided by the then
Fair Market Value of the Common Shares. Upon completion of this
calculation, each Stock Account shall be credited with the
resulting number of whole Common Shares and any remaining
amounts shall continue to be credited to the Stock Account until
converted to whole Common Shares at a future Adjustment Date or
purchase date. The Stock Account of each Participant shall be
credited with cash dividends on the Common Shares on and after
the date credited to the Stock Account. At the following
Adjustment Date (or, if later, the date on which Common Shares
are actually acquired), the amount of cash dividends credited to
each Stock Account (and any other amounts then credited to such
account) shall be divided by the then Fair Market Value of the
Common Shares; and the Stock Account of each Participant shall
be credited with the resulting number of whole Common Shares and
any remaining amounts shall continue to be credited to the Stock
Account until converted to whole Common Shares at a future
Adjustment Date or purchase date. The Plan Administrator may
prescribe any reasonable method or procedure for the accounting
of Additions.
E. Stock Adjustments. The number of Common Shares in the Stock
Account of each Participant shall be adjusted from time to time
to reflect stock splits, stock dividends or other changes in the
Common Shares resulting from a change in the Corporation 's
capital structure.
Section 5. PAYMENT OF DEFERRED BENEFITS
A. Time of Payment. Distribution of a Participant's Deferred
Compensation Account shall commence on the first business day of
the calendar month following the date of the Participant's
termination of service as a Director due to resignation,
retirement, death or otherwise.
B. Method of Distribution. A Participant's Deferred
Compensation Account shall be distributed to the Participant
either in a single lump sum payment or in equal annual
installments over a period of not more than five (5) years. To
the extent that a Deferred Compensation Account is distributed
in installment payments, the undisbursed portions of such
account shall continue to be credited with Additions in
accordance with the applicable provisions of Section 4.D. The
method of distribution (lump sum or installments) shall be
elected by the Participant prior to the date on which he ceases
to be a Director. In the absence of any election, a
Participant's Deferred Compensation Account shall be paid in
installments over a period of five (5) years. Cash Accounts
shall be distributed in cash. Stock Accounts shall be
distributed either in Common Shares or in cash, as elected by
the Participants. The form of distribution of a Participant's
Stock Account (cash or Common Shares) shall be elected by the
Participant in the Deferral Notice delivered to the Plan
Administrator at the time the deferral election (or treatment of
existing account balance) is made. In the event that a
distribution of a Participant's Stock Account is made in cash,
the Plan Administrator shall determine the amount of such
distribution by using the Fair Market Value of the Common Shares
as of the date of distribution, or, if later, the date on which
such Common Shares are actually sold.
C. Accelerated Distributions. If a Participant should die
before full payment of all amounts in his Deferred Compensation
Account, the Corporation shall, in the discretion of the Plan
Administrator, either pay or continue to pay the unpaid amounts
to the Participant's Beneficiary (i) in the same manner as it
would have been paid to the Participant, or (ii) in a lump sum
settlement of the remaining amount in the Participant's Deferred
Compensation Account no sooner than the day after and not later
than eighteen months following the Participant's death. In
addition, the Plan Administrator may, in its discretion,
accelerate the payments of those amounts in a Participant's
Deferred Compensation Account without the consent of the
Participant or the Participant's Beneficiary, estate or any
other person or persons claiming through or under him. In
making such determinations, due consideration may be given to
the health, financial circumstances and family obligations of
the Participant. In this regard, the Participant (or after his
death, his Beneficiary) may be consulted; however, he (or they)
shall have no voice in the decision reached.
D. Designation of Beneficiary. Upon the death of a
Participant, his Deferred Compensation Account shall be paid to
the Beneficiary designated by the Participant. If there is no
designated Beneficiary or no designated Beneficiary surviving at
a Participant's death, payment of the Participant's Deferred
Compensation Account shall be made in accordance with the
following priority:
(i) his spouse;
(ii) his natural and adopted children or their issue, per
stirpes;
(iii) his parents or the survivor of them;
(iv) his brothers and sisters or their issue, per stirpes; or
(v) his other heirs-at-law; and if payable to more than one
person in a class, all persons in that class shall share
equally.
If a Beneficiary survives the Participant but dies before
receiving the entire death benefit otherwise payable (and the
Beneficiary is not survived by a second Beneficiary, or the
second Beneficiary also dies), and such Beneficiary has not
effectively designated a Beneficiary to whom his Plan benefits
are to be paid if he dies before receipt of all such benefits,
the remainder shall be paid to the heir or heirs of the last
surviving Beneficiary in accordance with priorities (i) through
(v) above.
E. Taxes. In the event any taxes are required by law to be
withheld or paid from any payments made pursuant to the Plan,
the Plan Administrator shall deduct such amounts from such
payments and shall transmit the withheld amounts to the
appropriate taxing authority.
Section 6. ASSIGNMENT OR ALIENATION - The right of a
Participant, Beneficiary or any other person to the payment of a
benefit under this Plan may not be assigned, transferred,
pledged or encumbered except by Will or by the laws of descent
and distribution.
Section 7. PLAN ADMINISTRATION - The Plan Administrator will
have the right to interpret and construe the Plan and to
determine all questions of eligibility and of status, rights and
benefits of Participants and all other persons claiming benefits
under the Plan. In all such interpretations and constructions,
the Plan Administrator's determination will be based upon
uniform rules and practices applied in a nondiscriminatory
manner and will be binding upon all persons affected thereby.
Subject to the provisions of Section 8 below, any decision by
the Plan Administrator with respect to any such matters will be
final and binding on all parties. The Plan Administrator will
have absolute discretion in carrying out its responsibilities
under this Section 7.
Section 8. CLAIMS PROCEDURE
A. Filing Claims. Any Participant or Beneficiary entitled to
benefits under the Plan may file a claim request with the Plan
Administrator.
B. Notification to Claimant. If a claim request is wholly or
partially denied, the Plan Administrator will furnish to the
claimant a notice of the decision within ninety (90) days in
writing and in a manner calculated to be understood by the
claimant, which notice will contain the following information:
(i) the specific reason or reasons for the denial;
(ii) specific reference to pertinent Plan provisions upon
which the denial is based;
(iii) a description of any additional material or information
necessary for the claimant to perfect the claim and an
explanation of why such material or information is necessary; and
(iv) an explanation of the Plan's claims review procedure
describing the steps to be taken by a claimant who wishes to
submit his claims for review.
C. Review Procedure. A claimant or his authorized
representative may, with respect to any denied claim:
(i) request a review upon a written application filed within
sixty (60) days after receipt by the claimant of written notice
of the denial of his claim;
(ii) review pertinent documents; and
(iii) submit issues and comments in writing.
Any request or submission will be in writing and will be
directed to the Plan Administrator (or its designee). The Plan
Administrator (or its designee) will have the sole
responsibility for the review of any denied claim and will take
all steps appropriate in the light of its findings.
D. Decision on Review. The Plan Administrator (or its
designee) will render a decision upon review. If special
circumstances (such as the need to hold a hearing on any matter
pertaining to the denied claim) warrant additional time, the
decision will be rendered as soon as possible, but not later
than one hundred twenty (120) days after receipt of the request
for review. Written notice of any such extension will be
furnished to the claimant prior to the commencement of the
extension. The decision on review will be in writing and will
include specific reasons for the decision, written in a manner
calculated to be understood by the claimant, as well as specific
references to the pertinent provisions of the Plan on which the
decision is based. If the decision on review is not furnished
to the claimant within the time limits prescribed above, the
claim will be deemed denied on review.
Section 9. UNSECURED AND UNFUNDED OBLIGATION - Notwithstanding
any provision herein to the contrary, the benefits offered under
the Plan shall constitute an unfunded, unsecured promise by the
Corporation and its Affiliates to pay benefits determined
hereunder which are accrued by Participants while such
Participants are Directors. The Corporation may, in its
discretion, establish a trust to provide payment of all or a
portion of the benefits payable under this Plan. No
Participant, Beneficiary or any other person shall have any
interest in any particular assets of the Corporation or any
Affiliate (including the assets of any trust established by the
Corporation) by reason of the right to receive a benefit under
the Plan and any such Participant, Beneficiary or other person
shall have only the rights of a general unsecured creditor of
the Corporation and its Affiliates with respect to any rights
under the Plan. Nothing contained in the Plan shall constitute
a guaranty by the Corporation, any Affiliate or any other entity
or person that the assets of the Corporation or its Affiliates
(or any trust established by the Corporation) will be sufficient
to pay any benefit hereunder. All expenses and fees incurred in
the administration of the Plan shall be paid by the Corporation
or an Affiliate.
Section 10. AMENDMENT AND TERMINATION OF THE PLAN - The
Corporation reserves the right, by an action of the Plan
Administrator, to amend the Plan at any time, and from time to
time, in any manner which it deems desirable, provided that no
amendment will adversely affect the accrued benefits of any
Participant under the Plan. The Corporation also reserves the
right, by an action of the Plan Administrator, to terminate this
Plan at any time without providing any advance notice to any
Participant; and in the event of any Plan termination, the
Corporation reserves the right to then distribute all amounts
allocated to Participants' Deferred Compensation Accounts.
Section 11. BINDING UPON SUCCESSORS - The Plan shall be binding
upon and inure to the benefit of the Corporation, its
Affiliates, any of their successors and assigns and the
Participants and their heirs, executors, administrators and
legal representatives. In the event of the merger or
consolidation of the Corporation or any of its Affiliates with
or into any other corporation, or in the event substantially all
of the assets of the Corporation or any of its Affiliates shall
be transferred to another corporation, the successor corporation
resulting from the merger or consolidation, or the transferee of
such assets, as the case may be, shall, as a condition to the
consummation of the merger, consolidation or transfer, assume
the obligations of the Corporation or Affiliate hereunder and
shall be substituted for the Corporation or Affiliate hereunder.
Section 12. NO GUARANTEE OF PLAN PERMANENCY - This Plan does
not contain any guarantee of provisions for continued service as
a Director to any Participant nor is it guaranteed by the
Corporation or any of its Affiliates to be a permanent plan.
Section 13. GENDER - Any reference in the Plan made in the
masculine pronoun shall apply to both men and women.
Section 14. INCAPACITY OF RECIPIENT - In the event that a
Participant or Beneficiary is declared incompetent and a
guardian, conservator or other person legally charged with the
care of his person or of his estate is appointed, any benefits
under the Plan to which such Participant or Beneficiary is
entitled shall be paid to such guardian, conservator or other
person legally charged with the care of his person or his
estate. Except as provided hereinabove, when the Plan
Administrator, in its sole discretion, determines that a
Participant or Beneficiary is unable to manage his financial
affairs, the Plan Administrator may, but shall not be required
to, direct the Corporation to make distribution(s) to any one or
more of the spouse, lineal ascendants or descendants or other
closest living relatives of such Participant or Beneficiary who
demonstrates to the satisfaction of the Plan Administrator the
propriety of making such distribution(s). Any payment made
under this Section 14 shall be in complete discharge of any
liability under the Plan for such payment. The Plan
Administrator shall not be required to see to the application of
any such distribution made to any person.
Section 15. GOVERNING LAW - This Plan shall be construed in
accordance with and governed by the laws of the State of Ohio.
IN WITNESS WHEREOF, the Corporation has caused this amended and
restated Plan to be executed by a duly authorized officer as of
the Effective Date.
PEOPLES BANCORP INC.
By /s/ Robert E. Evans
Its President and Chief Executive Officer
PEOPLES BANCORP INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 9, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder(s) of common shares of Peoples Bancorp Inc.
(the "Company") hereby constitutes and appoints Robert E. Evans and Joseph
H. Wesel, or either of them, the Proxy or Proxies of the undersigned, with
full power of substitution, to attend the Annual Meeting of Shareholders of
the Company (the "Annual Meeting") to be held on Thursday, April 9, 1998,
in the Conference Room of The Peoples Banking and Trust Company,
138 Putnam Street, Marietta, Ohio, at 11:00 A.M., local time, and any
adjournment(s) thereof, and to vote all of the common shares of the
Company which the undersigned is entitled to vote at such Annual Meeting
or at any adjournment(s) thereof:
1. To elect three directors to serve for terms of three years each.
___FOR election as Directors of the Company of all of the nominees
listed below (except as marked to the contrary below.)*
___WITHHOLD AUTHORITY to vote for all of the nominees below.
Robert E. Evans Paul T. Theisen Thomas C. Vadakin
*(INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name in the list above.)
2. To approve the Peoples Bancorp Inc. 1998 Stock Option Plan
___FOR ___ABSTAIN ___AGAINST
3. To approve the Peoples Bancorp Inc. Deferred Compensation Plan for
Directors of Peoples Bancorp Inc. and Subsidiaries.
___FOR ___ABSTAIN ___AGAINST
4. In their discretion, the Proxies are authorized to vote upon such
other matters (none known at the time of solicitation of this proxy)
as may properly come before the Annual Meeting or any adjournment(s)
thereof.
(Continued, and to be executed and dated on the reverse side)
(Continued from other side)
WHERE A CHOICE IS INDICATED, THE COMMON SHARES REPRESENTED BY THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED OR NOT VOTED AS SPECIFIED.
IF NO CHOICE IS INDICATED, THE COMMON SHARES REPRESENTED BY THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED IN ITEM NO. 1 AS
DIRECTORS OF THE COMPANY AND FOR PROPOSALS LISTED IN ITEMS 2 AND 3.
IF ANY OTHER MATTERS ARE PROPERLY BROUGHT BEFORE THE ANNUAL MEETING OR
ANY ADJOURNMENT(S) THEREOF OR IF A NOMINEE FOR ELECTION AS A DIRECTOR
NAMED IN THE PROXY STATEMENT IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL
NOT SERVE, THE COMMON SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN
THE DISCRETION OF THE PROXIES ON SUCH MATTERS OR FOR SUCH SUBSTITUTE
NOMINEE(S) AS THE DIRECTORS MAY RECOMMEND.
All proxies previously given or executed by the undersigned are hereby
revoked. The undersigned acknowledges receipt of the accompanying Notice
of Annual Meeting of Shareholders and Proxy Statement for the
April 9, 1998 meeting and the Annual Report of the Company for the
fiscal year ended December 31, 1997.
Dated: _______________________________________, 1998
___________________________________________________
Signature of Shareholder(s)
___________________________________________________
Signature of Shareholder(s)
Please sign exactly as your name appears hereon. When common shares
are registered in two names, both shareholders must sign. When signing
as executor, administrator, trustee, guardian, attorney or agent, please
give full title as such. If shareholder is a corporation, please sign
in partnership name by authorized person. (Please note any change of
address on the Proxy.)
PLEASE FILL IN, DATE, SIGN AND RETURN PROMPTLY
USING THE ENCLOSED ENVELOPE
